PRECIOUS-Gold firms as dollar softens, but rate-hike fears limit gains

BY Reuters | ECONOMIC | 10/02/22 09:38 PM EDT

Oct 3 (Reuters) - Gold prices edged higher on Monday on a softer dollar, although central banks worldwide retained their aggressive monetary policies to tackle soaring inflation, limiting gains for safe-haven bullion.

FUNDAMENTALS

* Spot gold was up 0.3% at $1,665.29 per ounce, as of 0115 GMT.

* U.S. gold futures ticked 0.1% higher to $1,673.30.

* The dollar index was down 0.2%, making greenback-denominated gold less expensive for overseas buyers.

* Fed policymakers have been resolute in raising 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 curb inflation.

* Rising interest rates dim bullion's appeal as they increase the opportunity cost of holding the non-yielding asset.

* Euro zone inflation zoomed past forecasts to hit 10% in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.

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

* India, the world's second-biggest consumer of gold, slashed the base import prices of the metal on Friday.

* Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.15% to 939.70 tonnes on Friday.

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

* Spot silver rose 0.7% to $19.12 per ounce, platinum was 0.3% higher at $861.50 and palladium was up 0.5% at $2,167.75.

DATA/EVENTS (GMT)

0750 France S&P Global Mfg PMI

0755 Germany S&P Global/BME Mfg PMI

0800 EU S&P Global Mfg Final PMI

0830 UK S&P GLBL/CIPS Mfg PMI FNL

1345 US S&P Global Mfg PMI Final

1400 US ISM Manufacturing PMI

British finance minister, Kwasi Kwarteng, speaks at the

annual Conservative party conference in the aftermath of the

pound plummeting following his mini-budget (Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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