Sept 6 (Reuters) – Gold prices rose on Tuesday as a pause in the US dollar rally and energy crisis in Europe drove some investors towards the safe-haven bullion.
Spot goldrose 0.5% to USD 1,718.30 per ounce as of 648 GMT. Prices earlier rose nearly 1% to a one-week high.
US gold futures GCv1 gained 0.4% to USD 1,729.40.
The dollar index inched 0.1% lower but was not far from a 20-year peak scaled in the previous session.
“There’s been a bit of a safe-haven buying emanating out of this sort of burgeoning energy crisis in Europe,” said ANZ senior commodity strategist Daniel Hynes.
However, “it’s probably going to be a struggle to maintain any upward move considering the hawkish Fed (Federal Reserve) that we’ve got.”
An indefinite halt of the Nord Stream 1 gas pipeline, Europe’s major supply route, has intensified fears of a recession in the region, with consumers hurt by soaring energy prices.
A survey on Monday also showed the euro zone is almost certainly entering a recession with a deepening cost-of-living crisis and a gloomy outlook.
Investors now eye the European Central Bank’s rate action when it meets on Thursday, while a hefty interest rate hike is also expected from Fed’s Sept. 20-21 policy meet.
Even though gold is seen as a hedge against inflation and economic uncertainties, higher US interest rates increase the opportunity cost of holding the non-yielding bullion and boosts the dollar.
“What could come to its (gold’s) rescue is weaker macro data (the August jobs number helped) and lower inflation readings… But until that happens, rallies remain vulnerable,” Edward Meir, an analyst with ED&F Man Capital Markets said in a note.
“We see a USD 1,650-USD 1,775 trading range prevailing.”
Meanwhile, a government source told Reuters, India’s gold imports in August halved from a year ago.
Spot silver jumped 1.1% to USD 18.36 per ounce, platinum was 0.7% higher at USD 851.25 and palladium gained 1.6% to USD 2,065.96.
(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)