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

GOLD was steady on Monday as the dollar pulled back, although bullion’s appeal was limited after US business activity data last week backed expectations of a 25-basis-point interest rate hike by the Federal Reserve at its May meeting.

Spot gold held its ground at US$1,983.68 per ounce, as of 0107 GMT, after slipping 1 per cent on Friday. US gold futures edged 0.2 per cent higher at US$1,993.30.

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

Gold prices on Friday were pressured by surveys that showed US and euro zone business activity gathered pace in April, despite central bankers signalling they are nearing the peak of their interest rate-hiking cycles designed to cool demand enough among consumers to bring high inflation down.

Federal Reserve Governor Lisa Cook said on Friday the outlook for the next stage of central bank monetary policy has grown less clear after the institution has taken appropriately aggressive steps over the last year to lower price pressures.

The CME FedWatch tool shows that markets are pricing in an 89.1 per cent chance of a 25-basis-point hike by the Fed at its May 2-3 meeting.

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Gold ticks higher as dollar eases; central bank rate moves in focus

Gold is considered a hedge against inflation, but higher interest rates dim the non-yielding asset’s appeal.

Elevated domestic prices kept physical gold demand muted across Asian hubs last week, forcing dealers in India to offer discounts for a sixth straight week, with the Akshaya Tritiya festival also failing to offer much respite.

Spot silver edged up 0.2 per cent to US$25.08 per ounce, while platinum dropped 1.7 per cent to US$1,105.55 and palladium shed 1 per cent to US$1,586.79. REUTERS