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Gold prices firm as US dollar slides; rate-hike concerns cap upside

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Gold prices rose on Tuesday as a weaker dollar made bullion more attractive to overseas buyers, although risks from an imminent mega rate hike by the US Federal Reserve limited further gains.

As of 0709 GMT, spot gold was up 0.2% to $1,653.31 per ounce.

US gold futures fell 0.3% to $1,658.50.

The dollar index fell to a 1.5/2 week low as the pound surged following the UK’s dramatic U-turn on tax cuts that had shook global markets.

Jigger Trivedi, senior analyst at Mumbai-based Reliance Securities, said Tuesday’s rise in gold was largely due to the weakness of the US dollar.

However, “investment demand and retail demand are subdued and there are no major triggers that could push prices above $1,700 in the near term…there are still concerns related to rising interest rates,” Trivedi said. Added. [GOL/ETF] [GOL/AS]

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 939.10 tonnes on Monday, the lowest level since March 2020.

Gold has fallen nearly 10% so far this year as sharp U.S. rate hikes increase the opportunity cost of holding non-yielding assets, pushing up dollar and bond yields.

Steven Innes, managing partner at SPI Asset Management, said a significant drop in 10-year yields would be needed to create a greater impulse to send gold higher.

A fourth consecutive Fed rate hike of 75 basis points is expected next month after last week’s data showed inflation rose significantly in September.

According to Reuters technical analyst Wang Tao, the gold spot looks neutral in the $1,641 to $1,658 an ounce range.

Spot silver rose 0.4% to $18.75 an ounce, platinum rose 0.4% to $919.49 and palladium rose 1% to $2,020.40.

(Reporting by Eileen Soreng, Bangalore; Editing by Sherry Jacob-Phillips, Rashmi Aich, and Uttaresh.V)

(Only the headlines and photos in this report may have been modified by Business Standard staff. The rest of the content is auto-generated from syndicated feeds.)

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