Gold prices edge down after dollar’s rebound

Oct 27 (Reuters) – Gold prices eased in choppy trading on Thursday as a rise in the US dollar offset support for the precious metal from expectations the Federal Reserve will slow its interest rate hikes after a policy meeting next week.

Spot gold was down 0.2% to USD 1,661.25 per ounce by 1:41 p.m. EDT (1741 GMT), while US gold futures settled at USD 1,665.60, 0.2% lower on the day.

“Gold seems to be focused on the dollar and technicals here, along with an element of profit-taking from yesterday,” said Bart Melek, head of commodity markets strategy at TD Securities.

The dollar rose 0.6% against its rivals after dropping to more than a one-month low in the last session, making bullion less attractive for overseas buyers.

Data showed the US economy rebounded more than expected in the third quarter amid a decline in the trade deficit, returning to growth after a contraction in the first half of the year. Consumer spending, however, was curbed by the Fed’s aggressive rate increases.

Markets expect the US central bank to raise its benchmark overnight interest rate by another 75 basis points at its Nov. 1-2 policy meeting, with a potential for a smaller increase in December. US rate hikes increase the opportunity cost of holding zero-yielding bullion.

“It’s probably too early to talk about stopping rate increases … we don’t expect a pivot because inflation will continue to be a problem through much of next year,” Melek added.

In addition to next week’s US monetary policy meeting, investors will focus on the release on Friday of US personal income data for September, which will include the latest reading of an inflation measure closely watched by the Fed.

Elsewhere, spot silver fell 0.6% to USD 19.51 per ounce, platinum rose 1.3% to USD 963.38 and palladium was down 1.2% to USD 1,940.33.

(Reporting by Seher Dareen in Bengaluru; Editing by Maju Samuel, Susan Fenton and Paul Simao)