Gold prices climb as softer dollar lifts appeal

Reuters – Gold climbed on Monday after a weaker dollar made bullion more attractive for overseas investors, although prices hovered close to three-month lows as traders assessed prospects of more interest rate hikes by the US Federal Reserve.

Spot gold rose 0.3% to USD 1,926.19 per ounce by 0538 GMT. US gold futures also gained 0.3% to USD 1,936.00.

Bullion slumped nearly 2% in the previous week as hawkish comments from Fed officials signaled more rate hikes to tame sticky inflation.

Higher interest rates make non-yielding gold less appealing.

“We are near the end of tightening cycle, but still not quite at the end as there is still the risk of it being extended, hence the depressed price action,” said OCBC FX strategist Christopher Wong.

Investors now expect a 72% chance of a rate hike in July, with rate cuts seen from 2024 onwards, per CME’s Fedwatch tool.

The dollar index edged 0.2% lower.

Yet the lower trend in gold was “in part offset by strong physical consumption from central banks and China and some recession tail hedging,” Citi analysts said in a note.

Speculators raised their net log position in COMEX gold by 1,322 to 94,626 in the week ended June 20, CFTC data showed on Friday.

Oil prices were slightly higher as weekend troubles in Russia raised questions about crude supply, but left investors hesitant to draw any further conclusions.

“The Wagner fallout with Russia certainly added impetus to the gold market in early Asia. With that situation de-escalating quickly, gold is holding up just the same,” said Clifford Bennett, chief economist at ACY Securities.

Spot silver jumped 1.5% to USD 22.75 per ounce while platinum gained 1.3% to USD 928.74.

Auto-catalyst material palladium rose 0.8% to USD 1,294.59.

“We expect the downtrend to continue (in palladium)… but also note the increasing short squeeze risk in the event of any supply disruption or demand surprise to the upside,” Citi analysts added.

(Reporting by Seher Dareen in Bengaluru; Editing by Sherry Jacob-Phillips)