Gold prices slightly retreated on Monday from a three-month peak hit in the previous session, as the dollar and U.S. bond yields rose after a top U.S. central banker warned that the Federal Reserve is not “softening” fight against inflation yet.

Spot gold was 0.5% down at $1,762.70 per ounce, as of 0054 GMT, after hitting its highest since Aug. 18 on Friday. U.S. gold futures eased 0.2% to $1,766.

Gold prices posted their biggest weekly percentage gain since March 2020 last week after signs cooling U.S. inflation lifted hopes that the Fed could be less hawkish on rate hikes.

However, Fed Governor Christopher Waller on Sunday said the Fed may consider slowing the pace of rate increases at its next meeting but that should not be seen as a “softening” of its battle against inflation.

Waller said markets should now pay attention to the “endpoint” of rate increases, not the pace of each move, and the endpoint is likely “a ways off.”

Fed fund futures are now pricing in a 90% chance of a 50-basis point rate hike at the Fed’s December meeting.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The dollar index  rose 0.4% against its rivals after falling to a near three-month low on Friday, making gold more expensive for other currency holders.

Benchmark U.S. 10-year Treasury yielda edged up from a one-month low, increasing the opportunity cost of holding non-interest bearing gold.

Elsewhere, a spike in domestic prices put off gold consumers in India last week and prompted dealers to offer discounts, with higher rates playing spoilsport in China as well.

Spot silver fell 0.5% at $21.57 per ounce. Platinum eased 0.2% to $1,026.20 and palladium was steady at $2,037.60.


(Source : CNBC) , all rights reserved by original source.