Gold steadied on Monday as bargain hunting offset pressure from the dollar’s advance following the U.S. Federal Reserve’s signs that it was not softening its fight against inflation.
Spot gold was steady at $1,770.67 per ounce by 1:00 p.m. ET (1800 GMT) after falling nearly 1% earlier in the day.
U.S. gold futures rose 0.3% to $1,773.70.
The gains in the dollar and U.S. yields were weighing on gold, said Jim Wyckoff, senior analyst at Kitco Metals, adding that bargain hunting by bulls emboldened by previous week’s gains could have helped gold’s slight recovery.
Bullion reported its best weekly gain since March 2020 last week on hopes of slower rate hikes after data showed price pressure cooling in the United States.
Gold prices could go sideways to higher in the near term, Wyckoff added.
The dollar index rose 0.5%, while 10-year Treasury yields also rose, making gold more expensive for overseas buyers.
“Gold appears to have strong resistance with the $1,800 level, with decent support at the $1,750 region,” Edward Moya, senior analyst with OANDA, said in a note.
Federal Reserve Governor Christopher Waller said on Sunday the Fed might consider slowing the pace of rate increases at its next meeting but that should not be seen as a “softening” of its battle against inflation.
While gold is considered a hedge against inflation, rising rates tend to dull bullion’s appeal as it pays no interest.
Fed funds futures traders see an 89% probability of a 50 basis point increase at the central bank’s December meeting, with only an 11% likelihood of a 75 basis point rise.
Spot silver rose 1.2% to $21.95 per ounce, hovering near last session’s five-month peak. Platinum fell 1% to $1,018.19 while palladium was steady at $2,040.00. (Reporting by Seher Dareen in Bengaluru; Editing by Sandra Maler and Shounak Dasgupta)