Gold recovers on technical buying, softer U.S. dollar

Gold prices rose on Monday, supported by technical trading after the previous session’s steep fall and a pause in the dollar rally, although an impending oversized rate hike by the U.S. Federal Reserve limited bullion’s appeal.

FUNDAMENTALS


* Spot gold was up 0.5% at $1,650.49 per ounce, as of 0149 GMT. Prices fell more than 1% on Friday and marked its biggest weekly decline since July.

* U.S. gold futures were up 0.4% at $1,656.00.

* The dollar index was down 0.1%, easing some pressure on the greenback-priced gold.

* A “hotter-than-expected” September inflation report doesn’t necessarily mean the U.S. central bank needs to raise rates higher than officials projected at their most recent policy meeting, St. Louis Fed President James Bullard said on Friday, though it does warrant continued “frontloading” through larger hikes of three-quarters of a percentage point.

* Gold is highly sensitive to rising U.S. rates, which increases the opportunity cost of holding non-yielding gold.

* A survey from the University of Michigan on Friday showed consumer sentiment improved further in October, but inflation expectations deteriorated a bit as average national gasoline prices moved back up towards $4 per gallon after falling over the summer.

* Physical gold buying improved in India last week as prices cooled ahead of the Dhanteras and Diwali festivals later this month, while Chinese premiums stayed elevated amid robust demand.

* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.34% to 941.13 tonnes on Friday.

* Speculators cut their net long COMEX gold position by 3,651 contracts to 1,290 in week to Oct. 11, data showed on Friday.

* Spot silver rose 1% to $18.44 per ounce, platinum was 0.5% higher at $903.63 and palladium gained 1.9% to $2,025.80.