Gold fluctuates on BoE concerns

Gold has risen more than a third this year, making it one of the best-performing major commodities. The latest run has been propelled by expectations that the US central bank will lower rates this month, after Fed Chair Jerome Powell cautiously opened the door to a cut.

Gold fluctuated after comments by the Bank of England on removing emergency market support by the end of the week rattled traders, leaving investor sentiment fragile.

BOE Governor Andrew Bailey’s warning to fund managers to wind up positions that they can’t maintain before market support is withdrawn at the end of the week drove up Treasury yields and the dollar on Tuesday, pressuring gold.

The non-yielding metal gave up gains to end the day slightly lower.

Bullion edged up yesterday from a one-week low, and traders await critical US inflation data later in the week. A higher-than-expected consumer price index print could weigh on the metal if investors anticipate more hawkish action by the Federal Reserve.

The relentless rate hikes by the US central bank have sent gold down almost 19 percent from this year’s high set in March. The traditional haven has been out of favour with investors, whose sales from exchange-traded funds have driven much of the decline.

An “overtly inflationary bias” in the upcoming data could cement expectations of another big rate hike at the November meeting, Avtar Sandu, a senior manager of commodities at Phillip Nova, said in a note.

Spot gold was up 0,3 percent at US$1 670,93 an ounce as of 9:09 a.m. in London, after earlier falling as much as 0,3 percent. The Bloomberg Dollar Spot Index was little changed. Palladium, platinum and silver gained. — Bloomberg.