Gold prices rose on Tuesday amid a weak dollar but were stuck in a narrow range as investors held back from big bets ahead of a U.S. interest rate hike.
Spot gold was up 0.3% at $1,724.45 an ounce by 0311 GMT. U.S. gold futures rose 0.3 percent to $1,723.60 an ounce.
The dollar fell for a fourth straight session, down 0.2 percent against rivals, making gold cheaper for buyers holding other currencies. “We don’t see much confidence in the trends here. More importantly, the market seems to be waiting for the Fed’s announcement,” said Daily FX currency strategist Ilya Spivak.
“However, over the past two weeks, markets have been in line with the recovery in gold and the decline in the dollar, suggesting that they are somewhat comfortable with the outlook for interest rates that they believe is moving forward.”
The US Federal Reserve 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 100bp rate hike rose after US consumer prices posted their biggest increase in more than four decades in June. However, traders cut those rates after recent weak economic indicators.
Meanwhile, Latvian Central Bank President Mārtiņš Kazāks told the European Central Bank in an interview that after last week’s initial rate hike of half a point, he might not be done. Bloomberg news.
Higher interest rates increase the opportunity cost of holding non-bearing precious metals.
Shares of SPDR Gold Trust, the world’s largest gold-backed ETF, fell 0.06 percent to 1,005.29 tonnes on Monday, reflecting that sentiment. Elsewhere, silver was up 0.6 percent at $18.52 an ounce, platinum was up 0.8 percent at $886, and palladium was at $2,009.
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