Gold hits 3-month high as Fed comments weigh on dollar

Gold prices traded at three-month highs on Tuesday, while the dollar eased after US Federal Reserve officials cited a slower pace of interest rate hikes.

At 0911 GMT, spot gold was up 0.3% at $1,777.29 an ounce, hitting its highest since August 15. US gold futures were up 0.2% at $1,780.20.

“The metal could strengthen again on the back of a weaker dollar and weak Treasury yields ahead of another busy week in financial markets”, especially since the dollar can be pressured by the speeches of the members of the Fed and economic data in the United Statessaid Lukman Otunuga, an analyst at FXTM.

“A solid rally above $1,770 could encourage a bias towards the $1,800 psychological resistance level”, he added.

The dollar index was trading at three-month lows, increasing the bullion’s appeal to holders of other currencies.

Rising rates reduce the appeal of holding gold, which does not earn interest.

The price of gold has rallied more than $160 since falling to a more than a month low in early November.

In other precious metals, spot silver was up 0.2% at $22 an ounce, hitting its highest since early June; platinum gained 1.1% to $1,032.13; and palladium rose 1.9% to $2,064.44.

With information from Reuters