Gold loses ground but sticks close to $2,700 level

Bengaluru — Gold prices eased on Friday but hovered around the $2,700 level, as traders assessed the effect of Donald Trump’s presidency and its implications for the US interest rate outlook.

Spot gold fell 0.4% to $2,697.19/oz by 2.51am GMT and was headed for a weekly loss. However, prices rose more than 1% in the last session, bouncing from more than a three-week low.

US gold futures were flat at $2,704.50, while the US dollar index was set for a slight weekly gain after Trump’s election victory.

A stronger dollar makes bullion more expensive for overseas buyers.

Gold prices were marginally pressured due to the market’s uncertainty over US political and policy developments, said Kyle Rodda, financial market analyst at Capital.com.

The long-term uptrend stayed strong for gold, supported by expected rate cuts and geopolitical tensions, Rodda said.

Bullion is considered a hedge during uncertainties and tends to thrive in a low-interest-rate environment.

At the end of its two-day policy meeting on Thursday, the Federal Reserve cut interest rates by 25 basis points (bps) as expected, but indicated a careful and measured approach to any future rate cuts.

Traders now see a 71% chance of another 25bp cut in December, in what could be the third reduction this year.

In the long term, it still looked bullish for gold but in the short term, if prices dropped to $2,643, the next levels of support would be $2,620-$2,520, said Brian Lan, MD at Singapore-based dealer GoldSilver Central.

Meanwhile, global physically backed gold exchange-traded funds (ETFs) saw inflows for the sixth consecutive month in October, the World Gold Council (WGC) said.

Elsewhere, Beijing will wrap up a key five-day meeting later in the day, which investors are closely watching for more details on stimulus measures.

Spot silver fell 0.8% to $31.75/oz, platinum fell 0.2% to $994.80 and palladium shed 0.21% to $1,022.36.

Reuters