IGI Logo

Gold edged lower on Monday after eking out a narrow 0.1% gain last week, as investors assessed U.S. Federal Reserve officials' warning of further interest rate hikes ahead of a consumer inflation gauge due later this week.

Spot gold was down 0.1% to $1,923.33 per ounce by 0400 GMT, while U.S. gold futures fell 0.1% to $1,942.90.

Falling holdings of global gold exchange-traded funds (ETF) show that investing demand remains poor, said Praveen Singh, associate vice-president at Sharekhan, adding higher yields will pressure the precious metal.

SPDR Gold Trust, the world's largest gold-backed ETF, said its holdings fell on Friday to their lowest level since Jan. 2020. [GOL/ETF]

Fed officials warned on Friday of further rate hikes even after voting to hold the benchmark rate steady last week, with three policymakers saying they remain uncertain about whether the inflation battle is finished.

Higher interest rates discourage purchases of non-interest-paying bullion, which is priced in dollars.

The dollar hovered around a more than six-month high, while benchmark 10-year Treasury yields were near their 16-year peak. [USD/] [US/]

U.S. business activity showed little change in September, a survey published Friday showed, while a separate survey showed the euro zone economy is likely to contract this quarter and won't return to growth anytime soon.

The Bank of Japan maintained ultra-low interest rates on Friday and pledged to bring inflation sustainably to its 2% target.

Investors await the personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge which lands on Sept. 29, while also keeping an eye on events in Washington, where U.S. lawmakers are haggling over a spending bill with a Sept. 30 deadline to avert a potential government shutdown.

Spot silver fell 0.2% to $23.49 per ounce, platinum shed 0.3% to $923.28 and palladium steadied at $1,249.