Gold firms as dollar softens, but rate-hike fears limit gains

Gold prices edged higher on Monday on a softer dollar, although central banks worldwide retained their aggressive monetary policies to tackle soaring inflation, limiting gains for safe-haven bullion.

FUNDAMENTALS

* Spot gold was up 0.3% at $1,665.29 per ounce, as of 0115 GMT.

* U.S. gold futures ticked 0.1% higher to $1,673.30.

* The dollar index was down 0.2%, making greenback-denominated gold less expensive for overseas buyers.

* Fed policymakers have been resolute in raising interest rates despite a turmoil in global financial markets.

* Fed Vice Chair Lael Brainard on Friday added her full endorsement of the U.S. central bank’s higher-for-longer game plan for interest rates to curb inflation.

* Rising interest rates dim bullion’s appeal as they increase the opportunity cost of holding the non-yielding asset.

* Euro zone inflation zoomed past forecasts to hit 10% in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.

* The physical gold market in India flipped to a premium last week as demand improved ahead of festivities, while Chinese premiums stayed elevated.

* India, the world’s second-biggest consumer of gold, slashed the base import prices of the metal on Friday.

* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% to 939.70 tonnes on Friday.

* COMEX gold speculators increased net short position by 8,333 contracts to 41,300 in week ended Sept. 27, the U.S. Commodity Futures Trading Commission said on Friday.

* Spot silver rose 0.7% to $19.12 per ounce, platinum was 0.3% higher at $861.50 and palladium was up 0.5% at $2,167.75.