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Gold firms on softer dollar, rate-hike fears limit gains

10/03/2022 | 12:49am EST
An employee processes ingots of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk

(Reuters) - Gold prices edged higher on Monday on a softer dollar, although prospects of central banks worldwide retaining their aggressive monetary policy stance limited the gains for safe-haven bullion.

Spot gold rose 0.3% to $1,663.99 per ounce, as of 0416 GMT. U.S. gold futures were flat at $1,671.50.

The dollar index slipped in early Asia trade against a basket of currencies, while benchmark U.S. 10-year Treasury yields were slightly lower after rising for two days. [USD/]

"Recovery (gold's) seems to be more of a near-term moderation from oversold technical conditions, as no slack in Fed's tightening policies may suggest that any upside could potentially be sold into," said IG market strategist Yeap Jun Rong.

The Federal Reserve's No. 2 official on Friday added her full endorsement of the U.S. central bank's higher-for-longer game plan for interest rates to curb inflation.

Last month, the Fed raised its policy interest rate by 75 basis points, its third straight increase of that size, and signalled more large increases to come this year.

Gold posted its sixth straight monthly decline in September, marking its longest streak of monthly declines in four years.

Though gold is often seen as a hedge against inflation, rising U.S. interest rates increase the opportunity cost of holding the non-yielding asset and boost the dollar.

Meanwhile, Euro zone inflation hit a record high last month, reinforcing expectations for another jumbo rate hike this month from the European Central Bank.

On investors' radar are the U.S. non-farm payrolls data due on Friday and a host of manufacturing PMI data for insight into the health of the global economy.

"A more lukewarm (payrolls) reading may be preferred by gold bulls for a relief rally, but the absence of any pause in Fed's policies could still suggest that the overall downward trend may remain intact," IG's Yeap Jun Rong said.

Spot silver rose 1.2% to $19.23 per ounce, platinum edged 0.2% higher to $860.61 and palladium was up 0.3% to $2,164.89.

(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

By Eileen Soreng


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.91% 0.69517 Delayed Quote.1.54%
BRITISH POUND / US DOLLAR (GBP/USD) 0.10% 1.20399 Delayed Quote.-0.43%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.34% 0.74585 Delayed Quote.1.04%
DOW JONES FXCM DOLLAR INDEX 0.93% 12808.36 Real-time Quote.-0.28%
EURO / US DOLLAR (EUR/USD) -0.04% 1.0724 Delayed Quote.0.81%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.08% 0.012078 Delayed Quote.0.62%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.20% 0.6319 Delayed Quote.-0.36%
PALLADIUM 2.56% 1644.5 Delayed Quote.-8.95%
PLATINUM -0.28% 973.7 Delayed Quote.-8.45%
S&P GSCI GOLD INDEX 0.28% 1097.35 Real-time Quote.2.76%
S&P GSCI PLATINUM INDEX 0.70% 262.1477 Real-time Quote.-9.57%
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