Gold rebounds from one-week low as dollar slips
Gold rose more than 1% on Thursday, rebounding from a one-week low hit in the previous session as the US dollar eased, while investors assessed the likelihood of a Federal Reserve interest rate increase this month after a hot inflation report.
Spot gold was up 1.3% at $4,158.63 per ounce as of 0257 GMT, after hitting its lowest since October 7 on Wednesday. US gold futures for December delivery rose 1.8% to $4,180.00 per ounce. The dollar slipped after scaling an 18-month peak overnight; a softer dollar makes greenback-priced bullion more affordable for buyers overseas.
Kyle Rodda said the market was showing symptoms of uncertainty about US interest rate policy, resulting in a bit of volatility. He said gold was coming up to a really critical level just below the $4,000 level, and that if there was again some really strong data, there was a view that the Fed would have to hike relatively urgently, making that the level of focus.
US consumer prices accelerated in September as the cost of gasoline surged. Traders are pricing in about a 27% chance of a rate hike later this month, compared with 22% before the data, according to CME's FedWatch Tool. San Francisco Fed President Mary Daly said the US central bank will probably need to increase short-term interest rates further, though she signalled no need for a hike at the October 27-28 meeting. Vice Chair for Supervision Michelle Bowman said there is time to wait and see before any more action. Although gold is viewed as an inflation hedge, higher interest rates reduce its appeal because it does not pay interest.
Market focus now turns to the Producer Price Index and retail sales data due at 1230 GMT. Among other metals, spot silver gained 1.1% to $56.26 per ounce, platinum rose 0.3% to $1,611.15 and palladium climbed 1.3% to $1,107.83.
