Gold rises on dipping dollar, uncertainty over Fed

London: Gold inched up on Monday after a three-day losing streak, as the dollar’s ascent paused and uncertainty persisted over the timing of the first Federal Reserve rate increase in a decade.

Buying interest was kept in check by a rally in global equities, due to an increase in risk appetite after a new round of monetary easing from China on Friday.

Spot gold was up 0.3 per cent at $1,167.17 an ounce by 1035 GMT. The metal had dropped to $1,158.77 on Friday, its lowest since October 13, when the dollar soared to its highest level in more than two months.

Gold had risen 1 per cent soon after China’s surprise interest rate cut on Friday, as investors bet the US central bank would be compelled to delay a rate rise given the fragility of the global economy. But buying evaporated after upbeat US

data increased expectations of a Fed hike this year.

“Concerns about the continuing rally of the dollar created some nervousness and triggered selling on Friday, but sentiment has turned more favourable towards gold, as the timing of the Fed rate hike remains uncertain,” Saxo Bank senior manager Ole Hansen said.

“$1,158 is seen as the next major retracement area. Longs would be fairly resilient as long as we hold above $1,140.” Although the Fed is not expected to raise rates at this week’s meeting, investors will be watching for clues on its take on the global economy and whether a hike could come in December.

The dollar edged lower against a basket of currencies,/swhile the benchmark 10-year US. Treasury note yield/shivered around a two-week high hit on Friday.

As gold pays no interest, the rise in returns from US

bonds and other markets is seen as negative for the metal.

“We remain somewhat negative on gold over the short term, as ... the recent recovery in equities will be a headwind for the precious metal,” INTO FCStone analyst Edward Meir said.

Investor positioning has been more bullish.

Hedge funds and money managers raised their bullish bets in COMEX gold and silver in the week to October 20, data from the US.

Commodity Futures Trading Commission showed on Friday.

Net long positions in gold rose to their highest since February.

Industrial metals fell on Monday, with platinum down 1.6 per cent at $983 an ounce and palladium falling 1.5 per cent to $677.50 an ounce. Silver followed gold’s upside, rising 0.4 per cent to $15.87 an ounce.