Gold muted as Fed policy tightening prospects weigh

Gold prices were little changed on Thursday, according to Business Recorder, as traders weighed the prospect of further US rate tightening. Spot gold slipped 0.1 per cent to $4,281.98 an ounce by 0155 GMT, while December US gold futures held near $4,317.50.

The Federal Reserve lifted its benchmark rate by 25 basis points last week, placing it between 3.75% and 4.00%. Traders are positioning for a second consecutive increase later in October, just before critical national elections. Mounting inflation and a stronger economy seem to be driving the Fed toward that step. Rising rates generally make interest-paying assets more attractive, which can weigh on gold, even though the metal is widely seen as a hedge against inflation.

Oil prices eased after Iran said it was still willing to talk, although the two nations disagree sharply on how to halt the US-Iran conflict. Silver dropped 0.6 per cent to $64.07 an ounce, platinum edged up 0.2 per cent to $1,754.05 and palladium slipped 0.1 per cent to $1,260.70. A separate release on Wednesday showed US business activity surged to its highest level in over five years in September, while supply chains came under strain from firm demand.