Gold rebounds 1%, dollar weakness offsets rate hike fears

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The price of gold rose 1% on Tuesday as the dollar’s decline offset pressure from statements by US Federal Reserve officials about raising interest rates.

Spot gold was up 0.8% at $1,755.40 an ounce as of 0915 GMT. US gold futures were also up 0.8% at $1,753.90.

Gold prices posted their worst day in a month on Monday, down 1%, after US Federal Reserve officials James Bullard and John Williams reiterated their stance on further rate hikes.

The dollar index fell 0.4% against its rivals on Tuesday, lowering the price of gold for holders of other currencies.

Although the slight weakness in the dollar is supporting gold at the moment, we continue to expect further Fed rate hikes to weigh on bullion prices in the coming weeks, said UBS analyst Giovanni Staunovo.

Fed Chairman Jerome Powell’s speech at a Brookings Institution event on Wednesday is now of interest to traders seeking more clarity on the central bank’s policy stance.

The ADP national employment report and nonfarm payroll data from the US Department of Labor to be released this week also remain on the radar.

Meanwhile, Chinese police have come out en masse in Beijing and Shanghai to prevent further protests against COVID-19 restrictions.

Protests in China, the world’s largest consumer of gold, and the resulting heavy security presence will weigh on spending and industrial activity over the next month, weighing on all metals, said Michael Langford, director of the AirGuide corporate advice.

Among other precious metals, spot silver was up 1.7% at $21.26, platinum was up 1.4% at $1,002 and palladium added 0.7% to $1,856.75.

Source: Elcomercio

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