Gold gains on US dollar dip, but hinges on Fed taper cues

Bengaluru

GOLD prices inched higher on Friday as the dollar eased slightly, but uncertainty over the US Federal Reserve's next moves on unwinding its economic support measures kept bullion in a relatively tight range.

Spot gold rose 0.3 per cent to US$1,800.47 per ounce by 0904 GMT. US gold futures were up 0.2 per cent at US$1,804.00.

Lending support to gold, the dollar index was subdued on the day, making bullion more appealing for those holding other currencies.

But the US currency was still set for a first weekly gain in three, which also put gold on track for a weekly decline of 1.3 per cent.

Gold is seeing a range-bound trade and since the metal is "primarily looked at in terms of the dollar... it's the Fed which has the big impact on the gold price," said UBS analyst Giovanni Staunovo.

"Essentially it's all related to the Fed, and everyone is waiting for the next announcement." The Federal Open Market Committee is scheduled to next meet on Sept 21 to 22.

Gold investors closely follow cues from the Fed, since non-yielding bullion tends to gain when interest rates are low, while some consider bullion a hedge against higher inflation fuelled by massive stimulus.

And the signals were mixed, with a recent Fed report showing the US economy "downshifted slightly" in August. But a number of Fed officials said this week that the August slowdown in job growth would not throw off plans to reduce asset purchases this year.

However, gold continues to remain a buy on dips because central banks are in no hurry to raise interest rates, said Stephen Innes, managing partner at SPI Asset Management. "Growth is still a really big concern for central banks."

Elsewhere, silver climbed 0.6 per cent to US$24.21 per ounce and platinum rose 0.8 per cent to US$985.18. Palladium gained 1.7 per cent to US$2,216.50 but was down over 8 per cent for the week. REUTERS