Gold hovers near 4-week low before key U.S. Fed meeting

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Gold prices edged up from a four-week

low on Tuesday, as a pause in the dollar and Treasury yields

rally provided some respite, but gains were limited by growing

bets for aggressive monetary policy tightening from the Federal

Reserve.

Spot gold rose 0.3% to $1,824.21 per ounce, as of

0456 GMT, after falling to its lowest since May 19 at $1,810.90

earlier in the session.

U.S. gold futures fell 0.2% to $1,827.80.

Gold is getting some support from hikes being front loaded

with rate cuts sooner along the curve, said Stephen Innes,

managing partner at SPI Asset Management, but added that with no

one wanting to be short on the dollar heading into the Fed meet,

gains would be limited for gold.

The dollar steadied near a two-decade high scaled on Monday,

which sent greenback-priced bullion nearly 3% lower.

“Gold has faced selling pressure as investors have decided

to either go to cash, or offload gold to attend margin calls

across other markets,” City Index senior market analyst Matt

Simpson said.

He added that a 75-basis-point hike could see gold come

under further pressure, even if it then regains its status as an

inflationary hedge further out.

Late on Monday, expectations for a 75-basis-point hike by

the Fed on Wednesday jumped to 96% from 30% earlier in the day,

according to CME’s Fedwatch Tool. A 75-bp hike would be the

biggest since 1994.

Higher short-term U.S. interest rates and bond yields

increase the opportunity cost of holding bullion, which yields

no interest.

Spot gold may end its bounce around a resistance at $1,832

per ounce and resume its drop towards $1,808 thereafter,

according to Reuters technical analyst Wang Tao.

Spot silver gained 0.5% to $21.16 per ounce, platinum

firmed 0.4% to $936.77, and palladium rose 0.4% to

$1,804.17.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Subhranshu Sahu and Shailesh Kuber)

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