By Daksh Grover
(Reuters) – A marginally weaker U.S. dollar lifted gold prices on Thursday after they hit a more than three-week low, while attention shifts to the Federal Reserve’s upcoming interest rate decision.
Spot gold was up 0.3% at $2,665.86 per ounce, as of 0725 GMT. It hit its lowest level since Oct. 15 earlier in the session.
Bullion hit a record high of $2,790.15 last week and has lost more than $120 since then.
U.S. gold futures shed 0.1% to $2,672.80.
The dollar index slipped on Thursday after hitting a four-month high following Donald Trump’s win in the U.S. presidential election. A weaker dollar makes bullion more attractive for overseas buyers. [USD/]
Trump’s potential policy is inflationary and that could translate to slower Fed rate cuts, which is rather negative news for gold, but a widening U.S. budget deficit and reduced fiscal discipline will be positive, said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
Trump’s victory has fuelled questions about whether the Fed may proceed to cut rates at a slower and smaller pace. The prospect of several U.S. rate cuts has underpinned gold’s record rally this year.
Traders anticipate a 25-basis-point Fed rate reduction later in the day, with the focus on Chair Powell’s commentary for guidance on future rate cuts.
“The Fed has signalled numerous times that they will further reduce interest rates in the short term, which should support gold; prices will hit $2,800 before the end of the year,” said Michael Langford, chief investment officer at Scorpion Minerals.
Bullion is considered a hedge against economic uncertainties and lower rates reduce the opportunity cost of holding zero-yield bullion.
“I still think gold’s path remains bullish as people would like to buy it as a safe-haven to shield against risks. Still expect prices to hit $3,000 next year,” said Peter Fung, head of dealing at Wing Fung Precious Metals.
Spot silver edged 0.1% higher to $31.19 per ounce, platinum slipped 0.6% to $980.49 and palladium declined 0.3% to $1,032.31.
(Reporting by Daksh Grover and Ashitha Shivaprasad in Bengaluru; Editing by Alan Barona, Rashmi Aich, Sherry Jacob-Phillips and Sonia Cheema)
