Gold prices consolidated near the key $1,800 level on Thursday, supported by a pullback in US bond yields as investors looked forward to key central bank meetings for clues on whether they would consider tightening monetary policy earlier than thought.

Fundamentals

• Spot gold was up 0.1% at $1,799.13 per ounce, as of 0208 GMT. US gold futures were flat at 1,799.50.

• Benchmark 10-year US Treasury yields steadied close to a two-week trough, decreasing the opportunity cost of holding non-yielding bullion.

Gold prices rise

• Investors' focus has shifted to the Bank of Japan (BOJ) and European Central Bank (ECB) meetings expected later in the day. Both central banks are expected to keep policy unchanged with the ECB likely to push back against expectations for a rate hike next year.

  • Market participants also await the US Federal Reserve policy meeting on Nov. 3.

• US Fed officials face a ticking clock in their ability to ignore high inflation and are now navigating between their own senses of patience and risk, and a US economy stymied by tangled supply chains, slow hiring and strong consumer demand.

  • Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion.

• Central banks reducing emergency stimulus too quickly and further supply chain disruption are among the top risks to the world economy next year as the COVID-19 pandemic lingers, according to economists in a global Reuters poll.

  • Global demand for gold fell in the third quarter to its lowest since the last quarter of 2020 as financial investors sold the metal.

  • Spot silver was steady at $24.04 per ounce. Platinum gained 0.2% to $1,012.13 and palladium rose 0.4% to $1,971.19.