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Gold Pressured By Fed Rate Hike Prospects

Third-quarter growth figures from the United States and Fed policymakers speeches due this week will be closely watched by the market for clues on a possible interest rate hike

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Gold prices held within a narrow range on Monday as markets awaited further clues on the timing of an interest hike by the US Federal Reserve.

Spot gold was down 0.9 per cent at $1,265.68 an ounce at 0745 GMT, while US gold futures fell 0.1 per cent to $1,266.40.

"Given the risk is just going to be increased, most people are going to liquidate a part of their holdings, just to place themselves in a safer position," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

"Ahead of the US elections results, it will move around the level $1,250 to $1,270 without much momentum to go up," he added.

Third-quarter growth figures from the United States and Fed policymakers speeches due this week will be closely watched by the market for clues on a possible interest rate hike.

Hedge funds and money managers cut their net long positions in COMEX gold for a third straight week in the week to October 18, US Commodity Futures Trading Commission data showed on Friday.

San Francisco Fed President John Williams on Friday redoubled his call for raising rates soon, telling reporters after a speech here that "this year would be good" for a rate rise that he had wanted to take effect last month.

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

"People are watching the US elections and the data is on the positive side, favourable for a rate hike. As long as prices stay below the $1,300 mark, the downward trend might continue," said Hareesh V, research head of Geofin Comtrade Ltd.

"Prices need to break convincingly above the $1,300 level for a strong upside movement."

Spot gold is biased to retest a support at $1,261 per ounce, a break below which could cause a loss to $1,251, according to Reuters technical analyst Wang Tao.

Silver was up 0.1 per cent at $17.63 an ounce.

Platinum was up nearly 1 per cent at $938.00 an ounce. In the previous session, it touched a low of $921.20, its lowest level since February 29.

Palladium, which touched a more-than-three-month low of $613.10 in the previous session, rose 0.16 per cent at $629.00.

(Reuters)


Tags assigned to this article:
gold prices us elections silver federal reserve