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
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%
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