Gold eases as US dollar strengthens, traders await Fed policy cues

GOLD prices declined on Monday (Oct 28), pressured by a stronger US dollar, while investors awaited fresh signals regarding the Federal Reserve’s monetary policy trajectory.

Spot gold fell 0.5 per cent to US$2,732.90 per ounce, as at 0057 GMT. Prices hit a record high of US$2,758.37 on Wednesday while ending nearly 1 per cent higher last week.

US gold futures declined 0.33 per cent to US$2,745.30.

The US dollar index gained 0.2 per cent, making gold less appealing for other currency holders, while US bond yields also rose.

Data on Friday showed that US consumer sentiment climbed to a six-month high in October, with the uptick most pronounced among Republicans who grew more confident of a Donald Trump victory.

Elsewhere, Israel’s airstrikes “hit hard” Iran’s defences and missile production, Prime Minister Benjamin Netanyahu said on Sunday, as Iranian Supreme Leader Ayatollah Ali Khamenei said the country was considering its response.

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Bullion thrives in a low interest rate environment and is considered a hedge against political and economic uncertainty.

Markets are pricing in a 94.8 per cent chance for a 25-basis-point cut at the Fed’s November meeting, according to CME’s FedWatch Tool.

Uncertainty looms as the US approaches Election Day on Nov 5, with recent polls indicating a fiercely competitive race between Donald Trump and Kamala Harris.

Traders will be closely monitoring the US employment report scheduled for release on Friday, as they seek further insights.

On the physical front, gold demand in India ticked up last week ahead of a key festival but record-high prices discouraged many retail buyers from making their usual festive purchases.

Spot silver fell 0.4 per cent to US$33.57 per ounce, while palladium rose 0.23 per cent to US$1,025.15, and platinum edged 0.2 down to US$1,190.97. REUTERS