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B.and Nakul Iyer
September 16 (Reuters) – Gold fell on Thursday, with a firmer dollar and US bond yields reducing its appeal as investors turned their attention to next week’s Fed meeting for clues as to when it would begin its stimulus to reduce.
Spot gold XAU = fell 0.5% to $ 1,784.35 an ounce through 0859 GMT while US gold futures GCv1 also fell 0.5% to $ 1,785.10.
The dollar index = USD up 0.2%, adding to the cost of buying gold bars for those holding other currencies. USD /
The Federal Reserve Open Market Committee is scheduled to meet on September 21-22. A growing number of policymakers have expressed support for a reduction in the central bank‘s asset purchases this year.
“There are many FOMC members who are in favor of starting tapering this year and so the outlook for gold is not positive,” said Peter Ready, an analyst with Quantitative Commodity Research, adding that the latest data, showing a slowdown in US inflation last month said rejuvenation is unlikely to postpone.
Decreased central bank incentives tend to raise bond yields, increasing the opportunity cost of holding zero-interest gold. It also helps boost the dollar, which further weighs on the gold bullion.
“But extending the stimulus will not be cheap for stocks, and gold could be one of the beneficiaries of the money that is exiting the stock market,” said Vincent Tie, sales director at Singapore trader Silver Bullion.
“With the Fed slated to begin throttling by December, we could see higher gold prices in the fourth quarter of 2021.”
ANZ analysts also said in a note that negative real yields and inflation expectations should support investment demand for gold, despite the Fed’s signaling that tapering and rate hikes are imminent.
Sentiment indicator, holdings of the SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.2% to 998.46 tons on Wednesday.
Elsewhere silver XAG = fell 1.1% to $ 23.57 an ounce while palladium XPD = rose 1.5% to $ 2,033.61.
platinum XPT = fell 0.7% to $ 940.86.
(Reporting by Nakul Iyer and Eileen Soreng in Bengaluru; editing by Emelia Sithole-Matarise)
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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