The decline in the dollar makes gold shine

Gold edged higher after the dollar fell as weakness in the US economy fueled expectations that the Federal Reserve will slow the pace of interest rate hikes.

Spot gold rose 0.4% to $1,654.58 an ounce, while US gold futures settled up 0.2% at $1,658. "We're seeing some weakness in the dollar and some rally in other currencies against the dollar and that's pushing gold back up," said Bob Haberkorn, senior market strategist at RJO Futures. The dollar index, which measures the currency against six major peers, fell about 0.9%, making gold cheaper for overseas buyers. A survey on Monday showed US business activity contracted for a fourth straight month, sparking bets that the Fed could rein in its aggressive policy stance. If the Fed goes for a rate hike below the expected 75 basis points, it would signal a slowdown in those hikes and be bullish for gold, Haberkorn said. Rising interest rates reduce the attractiveness of gold bullion as they increase the opportunity cost of holding a non-yielding asset. "Investors are still taking a cold view on gold and thus creating a persistent headwind," Commerzbank analysts said in a note, adding that position data showed most speculative financial investors continued to bet on a falling gold price. Speculators moved to a net short position of 20,633 contracts in COMEX gold in the past week, the US Commodity Futures Trading Commission (CFTC) said on Friday. Meanwhile, data showed that top consumer China's net gold imports through Hong Kong in September halved from the previous month. Spot silver rose 0.4% to $19.34 an ounce, while platinum fell 0.8% to $917.53 and palladium dropped 2.1% to $1,926.75. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!