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Gold in tight range as investors wary of big Fed rate hikes

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Gold prices were stuck in a range on

Monday, with gains curbed by fears over big rate hikes by the

Federal Reserve, while investors stayed on the sidelines

awaiting U.S. inflation data later this week.

Spot gold steadied at $1,773.82 per ounce by 0900

GMT, after dropping 1% in the previous session. U.S. gold

futures fell 0.1% to $1,789.40.

The main factor against further recoveries in gold is

related to the growing pressure that the Fed could adopt an

aggressive stance after the solid U.S. labor data, said Carlo

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Alberto De Casa, external analyst for Kinesis Money.

But, investors are slightly recalibrating their position

after the dollar rally on Friday, and “maybe they are still

thinking that the peak of inflation is not too far and the

pressure on the Fed could slow down,” he added.

Traders currently see a 73.5% probability the Fed continues

the pace of 75-basis-point rate hikes for its next policy

decision on Sept. 21 to tame soaring inflation after U.S. job

growth unexpectedly accelerated in July.

The focus of market participants now shifts to the U.S.

consumer price index report due on Wednesday that could offer

more clues on the Fed’s rate hike path. Analysts polled by

Reuters expect annual inflation eased to 8.7% in July from 9.1%

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previously.

Higher U.S. interest rates raise the opportunity cost of

holding non-yielding bullion.

Another hotter-than-expected CPI print should force bullion

bulls to reckon with a Fed that has to persist with more

supersized rate hikes over the coming months, and such a

narrative should prompt spot gold to unwind more of its recent

gains, said Han Tan, chief market analyst at Exinity.

Offering some respite to gold, the U.S. dollar pulled

back slightly from its highest since July 28.

Spot silver rose 0.6% to $20.00 per ounce, while

platinum fell 0.4% to $928.20.

Palladium rose 1.4% to $2,154.97.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by

Shailesh Kuber)

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