Gold subdued on firmer dollar, Fed rate hike jitters

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Gold fell on Tuesday as the dollar edged

higher, while prospects of elevated U.S. interest rates for a

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longer period also weighed on the non-yielding bullion’s appeal.

Spot gold fell 0.2% to $1,733.79 per ounce by 0620

GMT, having hit a one-month low of $1,719.56 in the previous


U.S. gold futures were also down 0.2% at $1,745.50.

The dollar index ticked up 0.1%, after easing off a

two-decade peak hit on Monday.

Gold will continue to be driven by sentiment in the dollar

in the short term, said Stephen Innes, managing partner at SPI

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Asset Management.

“The market’s in a wait-and-see mode to see how the economic

data plays out and if it starts to get bad in the U.S. I think

that’s going to encourage the gold bulls to come back into the

fray again,” Innes added.

At the Jackson Hole central banking conference in Wyoming

the U.S. Federal Reserve and the European Central Bank struck a

hawkish note, pledging all efforts to tame stubbornly high

inflation even if growth takes a hit.

While gold is considered a safe bet during economic

uncertainty, interest-rate hikes increase the opportunity cost

of holding the bullion.

Markets are now largely pricing in a 75-basis-point rate

hike at the Fed’s September meeting.

Indicative of investor sentiment, holdings in SPDR Gold

Trust , the world’s largest gold-backed exchange-traded

fund, fell 0.4% to 980.61 tonnes on Monday.

Spot gold may retest a resistance at $1,742 per ounce, a

break above which could lead to a gain into a $1,748-$1,755

range, according to Reuters technical analyst Wang Tao.

Spot silver fell 0.3% to $18.70 per ounce, platinum

dropped 0.9% to $855.87 and palladium inched 0.1%

lower to $2,144.44.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi

Aich and Uttaresh.V)

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