Gold edges lower as dollar uptick dims appeal

Gold prices eased on Thursday hurt by a firmer , as investors assessed how central banks are likely to respond to surging inflation and concerns over economic growth spurred by the new Omicron coronavirus variant.

FUNDAMENTALS

* Spot gold XAU= fell 0.1% to $1,780.36 per ounce by 0050 GMT. U.S. gold futures GCv1 dropped 0.1% to $1,782.50.

* The dollar index held firm and rebounded 0.4% from the previous session’s low, increasing gold’s cost to buyers holding other currencies.

* The U.S. central bank needs to be ready to respond to the possibility that inflation may not recede in the second half of next year as most forecasters currently expect, Federal Reserve Chair Jerome Powell said on Wednesday.

* The latest COVID-19 variant could extend some of the supply-chain challenges and shortages that have led to higher inflation, and officials will need to factor that in as they decide how to withdraw their monetary policy support, New York Fed President John Williams said.

* Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

* The Fed has given up on its long-standing claim that high inflation is transitory but the Bank of England and the European Central Bank are not quite ready to follow its change of tune.

* U.S. manufacturing activity picked up in November amid strong demand for goods, keeping inflation high as factories continued to struggle with pandemic-related shortages of raw materials.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 990.82 tonnes on Wednesday from Tuesday.

* Spot silver rose 0.3% to $22.37 an ounce. Platinum gained 0.2% to $935.48, while palladium increased 0.4% to $1,753.68.

DATA/EVENTS (GMT) 1330 US Initial Jobless Claims Weekly