Gold slips on firmer greenback as focus turns to Fed meet

GOLD prices eased on Monday (May 1) as the US dollar ticked up, while traders awaited the US Federal Reserve’s policy meeting due this week.

Spot gold was down 0.2 per cent at US$1,986.15 per ounce by 0017 GMT. US gold futures fell 0.2 per cent to US$1,995.

The dollar index rose 0.1 per cent, making gold more expensive for overseas buyers.

US consumer spending was unchanged in March as an increase in outlays on services was offset by a decline in goods, but persistent strength in underlying inflation pressures could see the Fed raising interest rates again this week.

The FOMC (Federal Open Market Committee) meeting is due on May 2 to May 3, with investors expecting an 89.1 per cent chance of a 25 basis points rate hike.

Gold is known as an inflation hedge, but rising rates tend to dull the zero-yielding asset’s appeal.

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High gold prices kept physical demand tepid in key Asian centres last week, prompting dealers in India to extend discounts after a key bullion-buying festival spurred limited activity.

Spot silver fell 0.3 per cent to US$24.95 per ounce, while platinum lost 0.7 per cent to US$1,066.55 per ounce. Palladium inched 0.1 per cent lower to US$1,500.26.

China’s manufacturing activity unexpectedly shrank in April, raising pressure on policymakers seeking to boost an economy struggling for a post-Covid lift-off amid subdued global demand and persistent property weakness. REUTERS