Gold prices rose on Tuesday on the back
of a weaker dollar, but were stuck in a tight range as investors
refrained from taking big bets ahead a possible aggressive U.S.
interest rate hike.
Spot gold was up 0.3% at $1,724.45 per ounce, as of
0311 GMT. U.S. gold futures gained 0.3% to $1,723.60 per
The dollar slipped for a fourth straight session,
down 0.2% against its rivals, making gold less expensive for
buyers holding other currencies.
“We’re not really seeing a tremendous amount of directional
conviction here. It seems like the market is most importantly
waiting for the Fed announcement,” said Ilya Spivak, a currency
strategist at DailyFX.
“However, markets over the past two weeks have been
consistent with gold picking up and the dollar pulling back,
suggesting they are kind of getting comfortable with where the
rates outlook they think is going.”
The U.S. Federal Reserve is widely expected to raise
interest rates by 75 basis points at the conclusion of its
policy meeting on Wednesday. A hike of that magnitude would
effectively close out pandemic-era support for the economy.
Expectations around a 100-bp rate hike surged after U.S.
annual consumer prices saw their sharpest spike in more than
four decades in June. However, traders dialed down those bets
following recent weak economic readings.
Meanwhile, the European Central Bank may not be done with
big rate hikes after its initial half-point increase last week,
Latvian central bank governor Martins Kazaks said in an
interview with Bloomberg News.
Rising interest rates increase the opportunity cost of
holding non-yielding bullion.
Indicative of sentiment, holdings of SPDR Gold Trust ,
the world’s largest gold-backed exchange-traded fund, fell 0.06%
to 1,005.29 tonnes on Monday.
Elsewhere, spot silver rose 0.6% to $18.52 per ounce,
platinum gained 0.8% to $886 and palladium was
steady at $2,009.
(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu