Gold Prices Reverse Course as Dollar Strengthens

Why Are Metals Mixed in the Early Hours on October 20

Spot gold was down 0.2 percent at $1,263.86 an ounce at 0915 GMT.

The market also eyed Wednesday night's final USA presidential debate, which was judged not to have improved Donald Trump's election hopes and which could potentially weigh on gold. Traders are pricing in less than one-in-five odds of a hike at the Federal Reserve's next meeting, which takes place days before the presidential election, and about a 69 per cent chance of action in December.

"Even if they raise rates gold will not go down steeply". The dollar index, which tracks the greenback against six exchange-weighted currencies, rose 0.4% to 98.70. The euro hit a seven-month low against the dollar after the European Central Bank poured water on a tapering of its asset-buying program, keeping the door open for more stimulus this year. The greenback hit a seven-month high on speculation the USA will break away from stimulus measures in Europe and Asia.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. The single currency fell to its lowest since March against the dollar on Friday.

"What is more, Swiss gold exports to India climbed to their highest level since January, which points to demand recovering there", Commerzbank said in a note.

A slew of data including US home resales and unemployment filings appeared to indicate an improving USA economy that would support a rate hike later this year.

Home resales surged in September after two straight months of declines.

While other data on Thursday showed a bigger-than-expected increase in the number of Americans filing for unemployment benefits last week, the trend continued to suggest that the labour market remains strong. Silver was down 0.34% at $17.64 a troy ounce, platinum was down 0.26% at $ 941.50 a troy ounce and palladium was down 0.27% at $636 a troy ounce. For the week, prices rose 1.4 percent, clawing back part of the 6.6 percent shed over the last three weeks.

Gold prices in India swung to a premium for the first time in nine months on Wednesday as jewellers and dealers in the world's No.2 consumer of the metal ramped up purchases ahead of major festivals. Platinum was down almost 1 per cent at $924.90.

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