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Gold steadies in thin trading as investors look for fresh drivers

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Gold prices were little changed on Monday as weakness in U.S. dollar and equities countered pressure from expectations of higher interest rates amid thin trading as markets look for fresh catalysts.

Spot gold was unchanged at $1,792.14 per ounce by 1534 GMT, while U.S. gold futures rose 0.3% to $1,805.10.

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“The main thing is we’re just seeing a quieter day. We’re starting to see some pre-holiday trading set in and the gold and silver traders are looking for a fresh fundamental input after recent central bank data,” said Jim Wyckoff, senior analyst at Kitco Metals.

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U.S. Federal Reserve Chair Jerome Powell said last week the central bank will deliver more interest rate hikes next year. Other major central banks have also signaled the same.

Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion.

Prices could trade sideways to higher into the end of the year, with some early bargain hunting in the gold market once bigger institutions and funds start to make some new purchases, Wyckoff added.

Limiting losses in bullion, Wall Street’s main stock indexes were subdued at the open on Monday after two straight weeks of losses on recession worries, while the dollar also eased.

In top gold consumer China, COVID-19 is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai.

However, the government said it would step up measures to stabilize its economy amid damage from COVID-19.

“You’re going to need to see an uptick in economic activity in China in order to spark some of the industrial metals,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Spot silver fell 0.5% to $23.09 per ounce, platinum was steady at $991.10 while palladium fell 1.7% to $1,684.31. (Reporting by Seher Dareen in Bengaluru; Editing by Shounak Dasgupta)

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