Gold rose on Tuesday, supported by a weak dollar, but prices were stuck in a narrow range as investors refrained from taking large positions ahead of a possible U.S. rate hike.
The basics
* Spot gold was up 0.3% at $1,723.01 an ounce, while U.S. gold futures were at $1,719.80.
– The dollar fell for a fourth straight session, down 0.1% against a basket of major currencies, as investors weighed the impact of the Federal Reserve’s rate hikes on an economy that could be on the brink of recession.
* A weak dollar makes gold cheaper for buyers holding other currencies.
* The US central bank is expected to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. An increase of this magnitude would effectively eliminate pandemic-era support for the economy.
* Expectations for a 75 basis point hike from the Fed are about 79%, with a 23% chance of a 100 basis point increase, according to CME’s Fedwatch Tool.
* Meanwhile, Latvian Central Bank President Mārtiņš Kazāks said in an interview with Bloomberg News that the European Central Bank might not resort to a significant rate hike after last week’s initial half-point increase.
* Higher interest rates increase the opportunity cost of holding non-bearing precious metals.
* SPDR Gold Trust, the world’s largest gold-backed ETF, said its shares fell 0.06% to 1,005.29 tonnes on Monday from 1,005.87 tonnes on Friday.
Spot silver was up 0.3% at $18.46 an ounce, platinum was up 0.6% at $884.50, and palladium was down 0.1% at $20,005.89.
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