Gold up on softer dollar but rate-hike fears curb gains

Gold prices inched higher on Monday on a softer dollar, although central banks worldwide retained their aggressive monetary policies to tackle mounting inflation, curbing gains for safe-haven bullion.

Spot gold grew 0.3 percent at $1,665.29 per ounce, as of 0115 GMT.

U.S. gold futures went 0.1 percent higher to $1,673.30.

The dollar index fell 0.2 percent, making greenback-denominated gold less expensive for overseas buyers.

U.S. Federal reserve policymakers have been resolute in hiking interest rates despite a turmoil in global financial markets.

Fed Vice Chair Lael Brainard on Friday added her full endorsement of the U.S. central bank’s higher-for-longer game plan for interest rates to control inflation.

Increasing interest rates dim bullion’s appeal as they reinforced the opportunity cost of holding the non-yielding asset.

Euro zone inflation zoomed past forecasts to 10 percent in September, a new record high that will increase expectations for another jumbo interest rate increase next month from the European Central Bank (ECB).

Last week, the physical gold market in India flipped to a premium as demand improved ahead of festivities, while Chinese premiums stayed elevated.

India, the world’s second-biggest consumer of gold, cut the base import prices of the metal on Friday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.15 percent to 939.70 tons on Friday.

COMEX gold speculators boosted net short position by 8,333 contracts to 41,300 in week ended September 27, the U.S. Commodity Futures Trading Commission announced on Friday.

Spot silver grew 0.7 percent to $19.12 per ounce, platinum went 0.3 percent higher at $861.50 and palladium rose 0.5 percent at $2,167.75.