Gold eases on firmer US dollar, yields ahead of central bank meetings

[BENGALURU] Gold prices eased on Wednesday (Oct 27), retreating from the key US$1,800 mark, as a stronger US dollar and elevated bond yields dented bullion's safe-haven appeal ahead of key central bank meetings.

Spot gold was down 0.2 per cent at US$1,788.66 per ounce, as of 1.57 am GMT. US gold futures dropped 0.2 per cent to US$1,790.60.

The precious metal rallied to an over 1-month peak late last week, but has retreated 1.2 per cent from those levels.

Benchmark 10-year US Treasury yields rose, increasing non-interest bearing gold's opportunity cost.

The dollar also steadied close to a 1-week high hit in the previous session, making gold less appealing for buyers holding other currencies.

Market participants now await Thursday's Bank of Japan (BOJ) and European Central Bank meetings.

The BOJ is set to maintain its massive stimulus programme on Thursday (Oct 28) and slash this year's inflation forecast in a sign it has no intention to follow other central banks eyeing exits from crisis-mode policies.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion.

US consumer confidence unexpectedly rose in October as concerns about high inflation were offset by better labour market prospects, suggesting economic growth was picking up after a turbulent third quarter.

China's net gold imports via Hong Kong jumped nearly 60 per cent in September to their highest level in 5 months, data from the Hong Kong Census and Statistics Department showed.

Indicative of sentiment, SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.2 per cent to 979.81 tonnes on Tuesday (Oct 26) from 978.07 tonnes on Monday (Oct 25).

Spot silver fell 0.8 per cent to US$23.95 per ounce. Platinum eased 0.7 per cent to US$1,020.61 and palladium edged 0.3 per cent lower to US$2,005.51.

REUTERS