The dollar moved higher against the other major currencies on Friday, boosted by better-than-expected US inflation data, although gains were expected to remain limited ahead of the Federal Reserve’s policy meeting next week.
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Spot gold dipped by 0.1 percent to $1,321.53 an ounce at 1141 GMT, with US gold futures down 0.1 percent at $1,324.50.
The pound remained under pressure after the Bank of England kept monetary policy on hold on Thursday, but indicated that it could cut interest rates again as soon as November unless the economy picks up. A stronger dollar tends to hurt gold prices, since the metal is priced in dollars and becomes more expensive to other currency holders. United States gold futures for December delivery were down $7.30 at $1,310.70.
Market focus was on the South African Reserve Bank and US Federal Reserve interest rate decisions next week, which NKC African Economics said “will have a material effect on the rand”. The metal touched US$1,309.40 on Thursday, the lowest intraday level since Sept 2, and is down 0.8 per cent this week. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
The dollar gained 0.5% to a 10-day high against the euro after the inflation data.
Gold’s rally this year has stalled amid uncertainty over when the Fed will raise borrowing costs. The U.S. and Japanese central banks hold monetary policy meetings on September 20-21.
“Next week’s Fed and BOJ meetings hold special importance, as September was eyed as the month where monetary policy action will ignite”, Bernard Aw, a Singapore-based strategist at IG Asia Pte, said by e-mail.
Holdings in gold-backed exchange-traded funds rose 1.1 metric tons to 2,018.9 tons on Wednesday, data compiled by Bloomberg show. Silver was down 1% at $18.75 an ounce.
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Taking a hit from falling platinum prices, Impala Platinum closed four percent down at R62.40, while Anglo American Platinum shed 3.47 percent to R370.67. It is set to fall for a seventh week running for the first time since 2013. At 1500 GMT, the rand traded at 14.3005 per dollar, 0.46 percent weaker from its NY close on Thursday.
