KUALA LUMPUR: Gold prices eased in early Asian trade on Friday after falling more than one per cent in the previous session, as persistent US inflation fuelled expectations of further Federal Reserve (Fed) rate hikes, weighing on bullion.
FUNDAMENTALS
Spot gold fell 0.4 per cent to US$4,006.06 an ounce by 0036 GMT, while US gold futures for December delivery dropped 0.3 per cent to US$4,018.50.
Bullion was headed for a modest weekly gain but remained on track for a second consecutive monthly decline.
US inflation accelerated in September as consumers paid more for petrol and other goods, supporting economists’ expectations of a Fed interest rate increase in December.
Traders are now pricing in about a 75 per cent chance of a rate hike in December, according to the CME FedWatch Tool.
Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.
The European Central Bank (ECB) left interest rates unchanged in a widely anticipated move on Thursday but clearly signalled another hike in December, warning that high and rising energy costs were fuelling inflation risks.
ECB president Christine Lagarde will step down from her role on Feb 7, the central bank said.
Annual core inflation in Japan’s capital exceeded the central bank’s two per cent target by a wide margin in October, data showed on Friday, highlighting mounting price pressures and strengthening the case for further interest rate hikes.
The London Metal Exchange is seeking to turn metal held in its Hong Kong warehouses into digital assets that can be used for financing, a move linked to the territory’s five-year plan to expand its commodities hub, three people familiar with the matter said.
Spot silver fell one per cent to US$51.87 an ounce, platinum was steady at US$1,488.00, while palladium declined 0.5 per cent to US$1,000.75.
All three metals were headed for weekly and monthly declines.
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