Gold prices edged higher on Monday as
softer oil prices offered support, while investors assessed the
chances of a Federal Reserve interest rate hike later this year
and looked for fresh signals on the US central bank’s policy
trajectory.
Spot gold rose 0.3 per cent to $4,175.60 per ounce by 0259
GMT, while US gold futures for December delivery
gained 0.4 per cent to $4,196.40.
“Gold is posting a modest rise to start the week. The metal
is responding positively to the softer tone in oil prices from
an inflation standpoint,” said Tim Waterer, chief market analyst
at KCM Trade.
“In the near term, a more sustained decline in oil prices or
a clearer move lower in yields would be the most constructive
catalysts (for gold), as both would ease inflation and rate
concerns.”
Oil prices slipped on Monday after US President Donald Trump
waived sanctions and tariffs on Russia that may lead to more
Russian fuel exports.
Meanwhile, US import prices increased more than expected in
September, boosted by higher costs for energy products and a
range of other goods, further evidence of rising inflation
pressures as the Middle East conflict persists.
Market participants now await the Federal Open Market
Committee’s meeting on US interest rates and the Personal
Consumption Expenditures (PCE) data due next week. The US
central bank tracks the PCE price measures for its 2 per cent inflation
target.
According to the CME’s FedWatch Tool, traders are pricing in
a 16 per cent chance of a rate hike this month and a 92 per cent chance of an
increase in December.
While gold is typically considered a hedge against
inflation, higher interest rates reduce the appeal of the
non-yielding asset.
Elsewhere, the European Central Bank is likely to raise
interest rates by 25 basis points at least one more time this
year to fight inflationary pressures, the International Monetary
Fund said on Friday.
Among other metals, spot silver rose 0.9 per cent to $57.54
per ounce, platinum gained 0.7 per cent to $1,642.29 and
palladium climbed 1.5 per cent to $1,129.13.