PRECIOUS gold prices fall on the rise in the dollar as the Fed’s monetary policy judgment emerges


B.and Nakul Iyer

November 2 (Reuters)Gold prices fell on Tuesday, hurt by a rise in the dollar as investors wait for a US Federal Reserve policy meeting to get clues on how to combat mounting inflationary pressures and concerns about weaker economic growth.

Spot gold XAU = fell 0.1% to $ 1,791.23 an ounce by 0406 GMT. US gold futures GCv1 fell 0.2% to $ 1,791.80.

The dollar index rose 0.1% after falling 0.3% on Monday, making gold less attractive to buyers holding other currencies. USD /

Stephen Innes, managing partner at SPI Asset Management, believes gold will remain under pressure in an environment of central bank tightening, with the Fed most likely to announce the start of the economic slowdown in Wednesday’s meeting.

Increased price and wage hikes could challenge the Fed as it tries to strike a balance between containing inflation and helping a rebound in jobs lost since the pandemic.[[[[

“But assuming that US 10-year yields continue to trade at current levels, suggesting a weaker growth outlook in the minds of bondholders, gold could continue to receive support,” added Innes.

The benchmark 10-year returns have held up above 1.5% but have declined from multi-month highs of around 1.7% last month. US/

Innes said central banks were unlikely to launch an aggressive rate hike campaign amid weaker economic data such as the Institute for Supply Management (ISM) poll on Monday that showed US manufacturing activity had slowed over the past month.

Gold is often viewed as a hedge against inflation, although reduced incentives and rate hikes will drive government bond yields higher, which translates into higher opportunity costs for holding gold bars that do not pay interest.

The focus will also be on the Bank of England’s upcoming monetary policy meeting on Thursday as investors weighed the chances of an initial rate hike by a major central bank since the pandemic began.

Spot silver XAG = down 0.4% to $ 23.93 an ounce. platinum XPT = fell 1.1% to $ 1,052.30 and palladium XPD = fell 0.3% to $ 2,041.50.

(Reporting by Nakul Iyer in Bengaluru; editing by Sherry Jacob-Phillips)

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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