Gold eases as US dollar strengthens; traders eye Fed cues

GOLD prices drifted lower on Monday (Oct 14) as the US dollar strengthened, while market participants awaited fresh cues on the US Federal Reserve’s monetary policy path.

Spot gold fell 0.4 per cent to US$2,646.75 per ounce by 0022 GMT after rising 1 per cent in the previous session. US gold futures lost 0.5 per cent to US$2,663.90.

The US dollar index edged up 0.2 per cent, making bullion less attractive for other currency holders.

Data on Friday showed that US producer prices were unchanged in September, pointing to a still-favourable inflation outlook and supporting views that the Fed would cut interest rates again next month.

Traders see roughly 87 per cent probability the Fed would cut rates by 25 basis points at its November meeting, and a 13 per cent chance it will leave rates unchanged, according to CME’s FedWatch tool.

Zero-yield bullion is a preferred investment amid lower interest rates.

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Investors will also keep an eye on the US retail sales data due later this week for further cues on rate outlook.

Elsewhere, the United States said on Sunday it will send US troops to Israel along with an advanced US anti-missile system, in a highly unusual deployment meant to bolster the country’s air defences following missile attacks by Iran.

Spot silver edged 1 per cent lower to US$31.21 per ounce. Platinum fell 0.9 per cent to US$976.20 and palladium slipped 2.1 per cent to US$1,045.87.

Saturday’s news conference by China’s Finance Minister Lan Foan reiterated Beijing’s broad plans to revive the ailing economy, with promises made on significant increases to government debt and support for consumers and the property sector.

Japan’s Mitsui & Co plans to re-enter global precious metals trading to hedge client risk after a nine-year absence, three sources with knowledge of the matter told Reuters. REUTERS