Gold prices ease on dollar uptick as Fed policy verdict looms

Nov 2 (Reuters) – Gold prices eased on Tuesday, hurt by an uptick in the dollar as investors await a policy meeting of the U.S. central bank for clues to how it will fight growing inflationary pressures and worries over weaker economic growth.

Spot gold XAU= dipped 0.1% to $1,791.23 per ounce by 0406 GMT. U.S. gold futures GCv1 dropped 0.2% to $1,791.80.

The dollar index edged up 0.1% after declining 0.3% on Monday, making gold less appealing to buyers holding other currencies.

Stephen Innes, managing partner at SPI Asset Management, expects gold to remain pressured in an environment of central bank tightening, with the Fed most likely to announce the start of stimulus tapering in Wednesday’s meeting.

Elevated price and wage increases may challenge the Fed as they try to strike a balance between containing inflation and supporting a recovery in jobs lost since the pandemic. [

“But, provided U.S. 10-year yields continue to trade around current levels, suggesting a weaker growth outlook in bondholders’ minds, gold could remain supported,” Innes added.

Benchmark 10-year yields have held above 1.5%, but retreated from the multi-month highs of around 1.7% hit last month.

Innes said central banks were unlikely to start an aggressive rate hike campaign given the weaker economic data such as the Institute for Supply Management (ISM) survey on Monday that showed U.S. manufacturing activity had slowed last month.

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