Gold flat after last session's retreat from 1-1/2-month high

[BENGALURU] Gold prices held steady on Monday (Oct 25) after cutting gains in the prior session on US Federal Reserve chief Jerome Powell's comment that inflation could ease next year and the central bank was on track to start tapering its stimulus.

Spot gold was little changed at US$1,792.95 per ounce by 1.48 am GMT. US gold futures fell 0.1 per cent to US$1,793.70.

The metal rallied to its highest since early September on Friday before trimming gains on Fed Chairman Jerome Powell's comments on tapering.

Powell said it was not time for the Fed to raise interest rates, especially given employment was still low.

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 which pays no interest.

Treasury Secretary Janet Yellen said on Sunday the United States was not losing control of inflation, and inflation could return to normal by the second half of next year.

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Furthering pressuring gold, the dollar steadied after its steepest weekly loss in more than a month. A stronger dollar makes bullion less appealing to buyers holding other currencies.

Speculators cut their net long positions in gold in the week to Oct 19, US Commodity Futures Trading Commission data released on Friday showed.

Market participants now eye the Bank of Japan and the European Central Bank (ECB) meeting on Thursday. Neither of the 2 central banks are expected to change policy but market indicators suggested higher inflation than the ECB's guidance.

Spot silver was flat at US$24.31 per ounce. Platinum rose 0.1 per cent to US$1,041.26 per ounce and palladium gained 0.7 per cent to US$2,035.77.

REUTERS