Gold falls as dollar strengthens and Fed speakers come into focus

7 Nov 2023 , 09:52 AM

Tuesday’s early Asian hours saw a little decline in gold prices as the dollar recovered. However, bullion prices remained in a narrow range as investors remained cautious ahead of remarks from Federal Reserve officials, such as Chair Jerome Powell.

Spot gold had down 0.1% to $1,975.35 per ounce, while U.S. gold futures had dropped 0.3% to $1,982.10.

The dollar increased by 0.1% following its six-week low in the previous session, increasing the cost of gold for holders of foreign currencies. The yield on the benchmark 10-year Treasury was 4.6327%.

When Powell speaks on Wednesday and Thursday, investors will be watching to see if he sticks to the more dovish tone he adopted following the Fed’s policy meeting last week.

On Monday, Fed Governor Lisa Cook expressed her hope that the current target interest rate set by the central bank will be sufficient to bring inflation back to the Fed’s 2% aim.

In the meantime, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated that the US central bank probably still has work to do to rein in inflation.

According to futures, the Fed’s overnight lending rate will remain above 5% through June 2024.

The appeal of non-yielding bullion is diminished by rising interest rates, despite the perception of gold as an inflation hedge.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings increased by 0.50% to 867.57 tonnes on Monday from 863.24 tonnes on Friday.

In the Middle East, Israeli Prime Minister Benjamin Netanyahu declared that Israel would take into account ‘tactical little pauses’ in the battle in Gaza in order to allow supplies to enter or hostages to escape.

Spot silver down by 0.3% to $22.95 per ounce, palladium decreased by 0.3% to $1,103.16, and platinum decreased by 0.1% to $904.34.

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