By Ashitha Shivaprasad
(Reuters) – Gold prices reversed course to trade higher on Monday as a dollar rally lost steam, having pushed bullion to one-month lows earlier in the session after the U.S. Federal Reserve signalled higher interest rates.
Spot gold was steady at $1,737.57 per ounce by 2:15 p.m. ET (1815 GMT). Prices touched their lowest since July 27 at $1,719.56 earlier in the session.
U.S. gold futures settled flat at $1,749.7.
“Gold sold-off after Powell’s speech and right now the uptick is due to pure bargain hunting as well a pull-back in dollar … Gold will soon start trading in a small range till further clues from the Fed,” said Bob Haberkorn, senior market strategist at RJO Futures.
The dollar fell 0.1%, easing off two-decade highs, making gold less expensive for other currency holders. [USD/]
In a speech at Jackson Hole, Wyoming, Powell said Fed will raise rates as high as needed to curb inflation.
Market participants are now largely pricing in a 75-basis-point rate hike at the Fed’s September meeting.
Gold is considered an inflation hedge, but a high-interest rate environment dims the non-yielding asset’s appeal.
“Gold bulls’ upside price objective is to make a form above solid resistance at $1,800 and bears’ near-term downside price objective is pushing futures prices below solid technical support at $1,700,” said Jim Wyckoff, senior analyst at Kitco Metals.
Higher benchmark U.S. Treasury yields, capped gains in gold. [US/]
“The U.S. is headed into a recession, Fed can’t be aggressive then; once the market gets further confirmation on that, gold will start to rise,” Haberkorn added.
Meanwhile, Goldman Sachs slashed UK growth forecast, and expects a recession to start later in the year.
Spot silver fell 0.5% to $18.79 per ounce, platinum rose 0.2% to $865.04 and palladium rose 1.5% to $2,141.91.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri)
