Gold ticks higher as dollar eases but hawkish Fed mutes gains

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Nov 25 (Reuters) – Gold prices edged up on Thursday as the dollar eased, but hawkish comments by U.S. Federal Reserve policymakers dented the metal’s appeal and kept it well below the key $1,800 mark.

Spot gold rose 0.2% to $1,791.76 per ounce by 0501 GMT, after slipping to its lowest since Nov. 4 on Wednesday. U.S. gold futures added 0.4% to $1,791.60.

The dollar index edged 0.1% lower off a 16-month high hit in the previous session, reducing the metal’s cost to buyers holding other currencies.

Gold has slumped 4.5% from last week’s five-month high, with a growing number of Fed policymakers indicating they were open to accelerating stimulus tapering and raising interest rates quicker if high inflation held, minutes of the U.S. central bank’s last policy meeting showed.

“As markets price in some monetary policy normalization, that should weigh on gold in the short-term. But major central banks are unlikely to aggressively hike rates given the fiscal burden of higher interest rates and large government debt accumulated” said Hitesh Jain, lead analyst at Mumbai-based Yes Securities.

This more moderate monetary policy normalisation and the potential loss of momentum in economic growth next year as the base-effects of the pandemic wear-off, should support gold in the longer-term, Jain added.

Higher interest rates raise non-interest bearing gold’s opportunity cost.

Investors also took stock of a raft of data on Wednesday which included an upwards revision to U.S. third quarter GDP and a fall in weekly jobless claims to their lowest since 1969 last week.

Though data also showed price pressures heated up in October, with the U.S. personal consumption expenditures price index, excluding the volatile food and energy components, increasing 0.4%.

Spot silver rose 0.3% to $23.59 per ounce. Platinum rose 1.6% to $989.77 and palladium gained 2.3% to $1,893.76.

(Reporting by Nakul Iyer in Bengaluru; Editing by Rashmi Aich)


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