Gold prices rise on dollar dip; market eyes Fed rate-hike cues

GOLD prices edged higher in early Asian trading on Tuesday (Apr 25), helped by a softer dollar, although investors looked forward to further US economic data due this week to gauge the Federal Reserve’s next policy move.

Spot gold rose 0.4 per cent to US$1,996.99 per ounce by 0037 GMT. US gold futures gained 0.3 per cent to US$2,005.50.

The dollar index was down 0.1 per cent, making gold more attractive for buyers holding other currencies.

Dallas Fed’s report on Monday showed manufacturing activity in Texas contracted in April, highlighting the economic toll of the Fed’s rate tightening cycle.

Although gold is considered a hedge against inflation and economic uncertainty, higher interest rates dim the non-yielding asset’s appeal.

The CME FedWatch tool shows that markets are pricing in a 90.5 per cent chance of a 25-basis-point hike by the Fed at its May 2-3 meeting.

Rising concerns that the US Treasury Department could hit its debt limit in the coming months are leading investors to shun certain Treasury bills and pour into others as they seek out low risk places to park cash.

Indicative of sentiment, SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.41 per cent to 927.43 tonnes on Monday from 923.68 tonnes on Friday.

Spot silver edged 0.2 per cent higher to US$25.22 per ounce, platinum rose 0.5 per cent to US$1,087.70.

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Gold prices steady as dollar retreats; Fed rate path in focus

Palladium ticked 0.1 per cent higher to US$1,536.56. REUTERS