Bengaluru — Gold hovered near a three-month high on Tuesday, as a top US central bank official’s comment raised hopes that the Federal Reserve would adopt a less aggressive approach on rate hikes, while an uptick in the dollar kept gains in check.
Spot gold was flat at $1,771.00 an ounce at 2.28am GMT, after hitting its highest since August 17 on Monday.
US gold futures edged 0.2% lower to $1,774.30 an ounce.
“Gold has had a very strong run from $1,618 an ounce and is now due for some consolidation short term. However, the overall dominant risk remains very much to the upside,” Clifford Bennett, chief economist at ACY Securities, said. “The catalyst for the recent strong rally was partially the correction of the US dollar.”
Gold prices have risen $150 or nearly 10% since falling to a one-month low earlier this month as data showing an uptick in US unemployment rate in October and sings of cooling inflation led to Fed slowdown optimism.
The Fed is likely to soon slow its interest rates hikes, Fed vice-chair Lael Brainard signalled on Monday, but emphasised the central bank still had more work to do.
Traders now see an 89% probability of a 50-basis-point increase at the US central bank’s December meeting, with only an 11% likelihood of a 75-basis-point rise.
While gold is considered a hedge against inflation, rising interest rates tend to dull bullion’s appeal as the metal pays no interest.
Capping the gains, the dollar index rose 0.3% against its rivals, making gold more expensive for other currency holders.
Speculators cut net short positions by 30,659 contracts to 8,219 in Comex gold in the week to November 8, the US Commodity Futures Trading Commission said.
Spot silver rose 0.2% to $22 an ounce. Platinum gained 0.2% to $1,019.50, while palladium was steady at $2,025.