Gold ekes out gains as US dollar, yields ease

Gold prices edged higher on Friday, helped by a slight pullback in the dollar and bond yields as investors digested a still hawkish stance from the Federal Reserve.

Spot gold rose 0.3% to $1,925.21 per ounce by 1:59 p.m. EDT (1759 GMT), following three sessions of losses. U.S. gold futures settled 0.3% higher at $1,945.60 per ounce.

The dollar retreated from a six-month peak against a basket of major currencies, making gold less expensive for other currency holders, while benchmark 10-year Treasury yields slipped from 16-year highs.

“The main focal point is the idea that Fed will keep rates higher for longer and that has driven the dollar, yields higher and has applied pressure to not just gold, but commodity markets across the board,” said David Meger, director of metals trading at High Ridge Futures.

The U.S. central bank held interest rates steady this week, but they could be raised one more time by 25 basis points before the end of year, according to the Fed’s updated quarterly projections.

Non-yielding gold tends to fall out of favour among investors when interest rates rise.

“There is going to be a huge amount of emphasis now on the economic data, which is going be a massive driver now for the next six weeks in the run-up to the next (central bank) meetings,” said Craig Erlam, senior markets analyst at OANDA.

U.S. business activity showed little change in September, with the vast services sector essentially idling at the slowest pace since February, a survey published on Friday showed.

Minneapolis Federal Reserve President Neel Kashkari said U.S. consumer spending continues to defy expectations for it to falter in the face of the U.S. central bank’s stiff interest rate increases.

Silver was up 0.7% at $23.54 per ounce after hitting its highest since Sept. 5. Platinum climbed 0.8% to $926.45 and palladium fell 1% to $1,250.78.