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Gold dips as dollar firms, Fed rate hike looms

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Gold prices slipped on Monday, as an

elevated dollar and prospects of an aggressive interest rate

hike by the U.S. Federal Reserve this week dented demand for

non-yielding bullion.

FUNDAMENTALS

* Spot gold was down 0.2% at $1,722.84 per ounce, as

of 0110 GMT, after rising to a more than one-week high on

Friday.

* U.S. gold futures fell 0.5% to $1,718.70 per ounce.

* The dollar rose 0.1% against its rivals, making

greenback-priced bullion more expensive for buyers holding other

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currencies.

* The U.S. central bank will conclude a two-day meeting on

Wednesday, and markets are pricing in a 75-basis-point rate hike

to combat soaring inflation.

* Although gold is seen as a hedge against inflation, rising

interest rates increase the opportunity cost of holding bullion.

* U.S. Treasury Secretary Janet Yellen said on Sunday that

the U.S. economic growth was slowing and she acknowledged the

risk of a recession, but she said a downturn was not inevitable.

* Last week, the European Central Bank joined its global

peers in the fight against soaring inflation as it raised

interest rates by 50 bps.

* The European Central bank will raise its interest rates

until inflation falls back to its 2% target, President Christine

Lagarde said in an interview with Germany’s Funke Mediengruppe

published on Friday.

* Spot silver was down 0.6% at $18.48 per ounce,

platinum dipped 0.6% to $868.62, and palladium

slipped 1.5% to $1,999.94.

DATA/EVENTS (GMT)

0800 Germany Ifo Business Climate New July

0800 Germany Ifo Curr Conditions New July

0800 Germany Ifo Expectations New July

1000 UK CBI Business Optimism Q3

2350 Bank of Japan releases Minutes of Monetary Policy

Meetingheld on June 16 and 17

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu)



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