Gold eases as stronger dollar weighs, Fed meeting in focus

Gold prices edged lower in early Asian trade on Tuesday as a firmer US dollar weighed on greenback-denominated bullion, while investors awaited Federal Reserve's policy meeting this week for clues on the interest-rate outlook.

Fundamentals

Spot gold was down 0.1% at $4,013.70 per ounce by 0045 GMT, while US gold futures for December delivery dropped 0.3% to $4,027.10.

A firmer dollar reduces the appeal of dollar-priced bullion for overseas buyers.


Federal Reserve policymakers have telegraphed they will not raise US short-term borrowing costs again this week, but with inflation concerns still front and center, investors believe a rate-hike pause will not last for long.

Markets await the Fed's policy decision on Wednesday along with the Personal Consumption Expenditures data on Thursday, a key gauge closely watched by the central bank as it targets a 2% inflation rate.

Traders are pricing in about an 11% chance of a rate hike this week and an 82% chance of a December increase, according to the CME's FedWatch Tool.

While gold is often seen as a hedge against inflation, higher interest rates tend to reduce the appeal of non-yielding bullion.

On the geopolitical front, the Saudi-led coalition in Yemen said it intercepted and destroyed three ballistic missiles launched by Yemen's Houthis towards Saudi Arabia's Eastern Region early on Tuesday.

Separately, top officials from Saudi Arabia, Turkey and Pakistan met Iranian officials in Tehran on Monday in a bid to de-escalate the Middle East conflict.

In other metals markets, Russia's Nornickel, the world's largest palladium producer, said a planned furnace overhaul could reduce output of key metals in 2027-2028.

Spot silver edged 0.1% higher to $53.97 per ounce, platinum steadied at $1,527.81 and palladium slid 0.7% to $1,042.43.

Data/Events (Gmt)

1230 US Durable Goods, September

1400 US Consumer Confidence, October