Gold prices drift

BENGALURU. — Gold prices drifted in a narrow range yesterday, but held near the previous session's low, pressured by a firmer dollar and expectations of a series of interest rate hikes by the US Federal Reserve this year and in 2018. Spot gold was nearly unchanged at $1 276,61 per ounce at 0734 GMT.

On Friday, gold dropped 0,7 percent for its biggest one-day percentage fall since October 26, weighed down by a rise in US Treasury bond yields. US gold futures for December delivery were up 0,2 percent at $1 277,10.

“The sell-off (on Friday) underlines the sensitivity of gold to the US yield curve and further emphasises that the safe-haven premium in the gold price is mainly non-existent at the moment,” said Jeffrey Halley, a senior market analyst with OANDA.

“Gold's fate will not be its own as we enter the home stretch of 2017.”

The expectation of an interest rate hike by the Fed next month is keeping gold prices range-bound, said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold. Philadelphia Fed President Patrick Harker said yesterday that he expects to back an interest rate hike next month and expects the central bank in the United States to raise rates three times next year.

“Markets are digesting this news and we don't see much movement in gold prices in the next one or two months,” Xu said. Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.