Gold prices crept up on Monday as the dollar held close to a two-month low hit in the previous session, with investors noting the U.S. Federal Reserve's cautious view of inflation. Spot gold had risen 0.2 percent to $1,290 an ounce by 0420 GMT. U.S. gold futures for December delivery were up 0.2 percent at $1,289.90. "The inverse relationship between the dollar and gold prices is in effect (today)," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. "But I don't think that kind of relationship is robust enough to wager larger bets … While prices are moving up, movement will still be range-bound." The dollar index, which measures the greenback against a basket of six major currencies, was flat at 92.783 and hovered near a two-month low of 92.675 hit on Friday. A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies. "Attention is apparently more focused on equity markets rather than precious metals as we begin the week," said Jeffrey Halley, a senior market analyst with OANDA. "Thus far we have yet to see any safe-haven premium creep into gold's price to reflect nervousness in equities and China bonds." Asian stocks gave back earlier modest gains and fell back from a decade-high on Monday, weighed down by weakness in the Chinese and South Korean markets. Investors will be looking to the Congressional hearing on Fed Chair nominee Jerome Powell on Tuesday. Last week, minutes of the Fed's previous meeting revealed that some policymakers had voiced concerns over inflation outlook and emphasized they would be looking at upcoming economic data before deciding the timing of future rate rises. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Also on Tuesday, U.S. President Donald Trump will meet Senate Republicans to discuss their party's efforts to pass tax reform legislation. Meanwhile, the global gold mining industry will experience steady production growth, supported by rising prices and improving operational costs over the coming years, BMI Research said in a note. Spot gold is biased to drop to $1,283 per ounce, as it failed to break resistance at $1,296, according to Reuters technical analyst Wang Tao. Among other precious metals, silver rose 0.4 percent to $17.05 an ounce, while platinum shed 0.2 percent to $938.05 an ounce. Palladium was down 0.2 percent at $995.70 an ounce. Source: Reuters
