Gold inches lower on dollar uptick; focus on key central bank meetings

[BENGALURU] Gold prices edged lower on Tuesday (Oct 26), weighed down by an uptick in the dollar as investors eye upcoming key central bank meetings this week.

Spot gold fell 0.1 per cent to US$1,805.96 per ounce by 1.16 am GMT. US gold futures was flat at US$1,806.60.

On Monday (Oct 25), the metal rose nearly 1 per cent to a high of US$1,809.66, only about US$4 shy of an over 1-month peak scaled last week.

The dollar rose 0.1 per cent on Tuesday, recovering from a near 1-month trough hit during the previous session. A stronger greenback makes gold more expensive for buyers holding other currencies.

Benchmark 10-year US Treasury yields were also a tad higher at 1.6431 per cent, raising non-interest bearing gold's opportunity cost.

Market participants eye meetings from the Bank of Japan and the European Central Bank (ECB) on Thursday (Oct 28). Neither of the central bank is likely to announce a change in policy, though the ECB might address how inflationary pressures could affect policy.

The US Federal Reserve and the Bank of England are also set to meet next week.

Bank of England interest rate-setter Silvana Tenreyro said she needed more time to judge how the end of the government's job-saving furlough scheme was affecting the labour market, adding to signs that she sees no urgency to raise rates.

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.

Spot silver fell 0.1 per cent to US$24.53 per ounce. Platinum edged 0.1 per cent down to US$1,056.35 and palladium gained 0.2 per cent to US$2,055.16.

REUTERS