Gold eases for sixth session as dollar marches upward

Gold retreated for the sixth straight day on Wednesday on an advancing dollar and diminished expectations for a larger rate cut from the Federal Reserve in November.

Spot gold fell 0.5% to USD 2,607.93 per ounce by 02:39 p.m. ET (1839 GMT). US gold futures for December delivery settled 0.4% lower at USD 2,626.

“The markets aren’t moving because the extraordinary payrolls report may require a recalibration by the FOMC. It’s why gold hasn’t budged and looks to be down for the sixth straight session though the pullback has been modest,” said Tai Wong, a New York-based independent metals trader.

“The dollar has surged over the past few sessions that’s adding downward pressure to gold,” he added.

The dollar index hit a near two-month high, making bullion more expensive for holders of other currencies.

The minutes of the Sept. 17-18 session, at which the Fed lowered the benchmark policy rate by half a percentage point, noted the future pace of cuts will not be determined by large initial reduction.

Markets now see a 76% likelihood of a 25-basis-point cut from the Fed next month, according to the CME FedWatch tool. Zero-yield bullion is a preferred investment amid lower interest rates.

Dallas Fed Bank President Lorie Logan said she wants
smaller reductions ahead, given the “still real” upside risks to inflation and “meaningful uncertainties” over the economic outlook.

Investors now await US Consumer Price Index (CPI) and Producer Price Index (PPI) data due on Thursday and Friday, respectively, for further insights on the interest rate outlook.

“Despite the modest pull-back, expectations of lower interest rates and ongoing geopolitical tensions suggest the backdrop for gold is likely to remain supportive over the long term,” said Kinesis Money market analyst Carlo Alberto De Casa in a note.

Spot silver slipped 0.8% to USD 30.46 per ounce. Platinum was steady at USD 949.91, while palladium rose 1.6% to USD 1,038.25.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid, Alan Barona, and Shreya Biswas)