Band Arundhati Sarkar
October 25 (Reuters) – Gold prices remained firm near the key $ 1,800 level on Monday as the decline in the US dollar strengthened bullion’s appeal as a safe haven, as investors cautiously watched the next Federal Reserve meeting to obtain advice on its monetary policy.
Spotted gold XAU = was up 0.6% to $ 1,803.06 an ounce, at 0858 GMT. US Gold Futures GCv1 rose 0.4% to $ 1,802.80.
The dollar index = USD hit a nearly one-month low, making bullion more attractive to buyers holding other currencies. USD /
Right now, gold is pulled more by the dollar, and while there is a perception that inflation will be transient, there is a lingering element of pressure, said Michael Hewson, chief market analyst. at CMC Markets UK.
âThere is a perception that the Fed is late and (will be) forced to act due to more persistent inflationary pressures,â Hewson added.
Gold hit its highest level since early September on Friday before slashing gains after Powell said the U.S. central bank should start slashing asset purchases, but reiterated his view that high inflation will likely decrease next year.
Powell also added that it was not yet time to start raising interest rates and that he would wait for the job market to recover.
The next FOMC meeting is scheduled for 2-3 November.
Gold is often seen as a hedge against inflation, although lower stimulus and rising interest rates push up government bond yields, resulting in a higher opportunity cost. for non-productive ingots.
The dollar retreated as markets adjust to the spread of inflation fears around the world, Ricardo Evangelista, senior analyst at ActivTrades, said in a note.
This means that the forces that supported the dollar earlier in the year are now pushing other currencies to new highs, “a dynamic that penalizes the dollar and therefore supports gold.”
Market participants are now eyeing the Bank of Japan and European Central Bank meetings scheduled for Thursday.
Spotted silver XAG = rose 0.6% to $ 24.46 an ounce. Platinum XPT = gained 0.3% to $ 1,043.51 and palladium XPD = climbed 1.2% to $ 2,046.39 an ounce.
(Reporting by Arundhati Sarkar in Bangalore; Editing by Sherry Jacob-Phillips)
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