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Gold firms as U.S. dollar slides; rate-hike concerns cap upside

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Gold prices rose on Tuesday as a

weaker dollar lifted bullion’s appeal for overseas buyers,

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although risks from the imminent supersized interest rate hikes

by the U.S. Federal Reserve limited further gains.

Spot gold rose 0.2% to $1,653.31 per ounce, as of

0709 GMT.

U.S. gold futures were down 0.3% at $1,658.50.

The dollar index fell to a 1-1/2-week low as sterling

jumped following the UK’s dramatic U-turn over the tax-slashing

mini budget that had rattled global markets.

Gold’s rise on Tuesday is mainly attributable to the

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weakness in the greenback, said Jigar Trivedi, a senior analyst

at Mumbai-based Reliance Securities.

However, “the investment demand and retail demand have been

muted and there is no major trigger that can take prices above

$1,700 in the near term… There are still concerns related to

the interest rate hikes,” Trivedi added.

Holdings of SPDR Gold Trust , the world’s largest

gold-backed exchange-traded fund, fell to 939.10 tonnes on

Monday, its lowest level since March 2020.

Gold has fallen nearly 10% so far this year as sharp U.S.

rate hike increased the opportunity cost of holding the

non-yielding asset and boosted the dollar and bond yields.

A significant drop in the 10-year yields would be required

to create a significant impulse to send gold higher, said

Stephen Innes, managing partner at SPI Asset Management.

A fourth straight 75-basis-point Fed rate hike is expected

next month after data last week showed inflation increasing

strongly in September.

According to Reuters technical analyst Wang Tao, spot gold

looks neutral in a range of $1,641-$1,658 per ounce, and an

escape could suggest a direction.

Spot silver rose 0.4% to $18.75 per ounce, platinum

was 0.4% higher at $919.49 and palladium gained 1%

to $2,020.40.

(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry

Jacob-Phillips, Rashmi Aich, and Uttaresh.V)

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