Gold prices hold firm as dollar sags

Gold prices on Friday held onto most of their gains from the previous session as the dollar sagged after a report that US President Donald Trump was leaning toward a less hawkish candidate as the next chair of the Federal Reserve.

Fundamentals

Spot gold was steady at $1,289.52 an ounce at 0042 GMT. It gained 0.7 per cent in the previous session.

US gold futures GCcv1 for December delivery edged up 0.1 per cent to $1,291.30 per ounce.

The dollar index .DXY, which measures the greenback against a basket of currencies, was down 0.1 per cent at 93.193.

Federal Reserve Governor Jerome Powell is the leading candidate to become the chair of the US central bank after President Donald Trump concluded a series of meetings with five finalists on Thursday, Politico reported, citing three administration officials.

US President Donald Trump has concluded interviews with the five candidates he is considering to chair the Federal Reserve and could announce a decision as early as next week, a source familiar with the process said on Thursday.

Powell is considered less hawkish than other choices on Trump’s short list like former Fed Governor Kevin Warsh and economist John Taylor. Powell would be expected to favour lower interest rates for the United States, reducing the value of the dollar to investors.

The number of Americans filing for unemployment benefits dropped to its lowest in more than 44-1/2 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.

The European Central Bank will say on October 26 it will start trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January, according to a Reuters poll of economists.

British retail sales slowed unexpectedly sharply in September, dragging quarterly growth to its weakest annual rate since 2013 and suggesting consumer demand remains uncertain as the Bank of England nears its first rate rise in a decade.

Spain’s central government said on Thursday it would suspend Catalonia’s autonomy and impose direct rule after the region’s leader threatened to go ahead with a formal declaration of independence if Madrid refused to hold talks.

Demand for gold jumped in India this week on account of Dhanteras and Diwali, but high prices took some sheen off the yellow metal’s lure during the key festival period this year.