Gold eases as stronger dollar weighs, Fed meeting in focus

LONDON: Gold prices edged lower in early Asian trade on Tuesday as a firmer US dollar weighed on greenback-denominated bullion, while investors awaited Federal Reserve's policy meeting this week for clues on the interest-rate outlook.

FUNDAMENTALS

* Spot gold was down 0.1 per cent at $4,013.70 per ounce by 0045 GMT, while US gold futures for December delivery dropped 0.3 per cent to $4,027.10.

* A firmer dollar reduces the appeal of dollar-priced bullion for overseas buyers.

* Federal Reserve policymakers have telegraphed they will not raise US short-term borrowing costs again this week, but with inflation concerns still front and center, investors believe a rate-hike pause will not last for long.

* Markets await the Fed's policy decision on Wednesday along with the Personal Consumption Expenditures data on Thursday, a key gauge closely watched by the central bank as it targets a two per cent inflation rate.

* Traders are pricing in about an 11 per cent chance of a rate hike this week and an 82 per cent chance of a December increase, according to the CME's FedWatch Tool.

* While gold is often seen as a hedge against inflation, higher interest rates tend to reduce the appeal of non-yielding bullion.

* On the geopolitical front, the Saudi-led coalition in Yemen said it intercepted and destroyed three ballistic missiles launched by Yemen's Houthis towards Saudi Arabia's Eastern Region early on Tuesday.

* Separately, top officials from Saudi Arabia, Turkey and Pakistan met Iranian officials in Tehran on Monday in a bid to de-escalate the Middle East conflict.

* In other metals markets, Russia's Nornickel, the world's largest palladium producer, said a planned furnace overhaul could reduce output of key metals in 2027-2028.

* Spot silver edged 0.1 per cent higher to US$53.97 per ounce, platinum steadied at US$1,527.81 and palladium slid 0.7 per cent to US$1,042.43.