May 30 (Reuters) – Gold prices held firm on Monday in mostly range-bound trade, helped by a dip in the dollar, while investors have dialled down their expectations of further aggressive monetary policy tightening in the United States.
Spot gold edged up 0.1% to USD 1,854.49 per ounce by 2:18 p.m. ET (1818 GMT). US gold futures rose 0.04 % to USD 1,858.00.
Gold prices are on course for a second straight monthly fall.
The dollar index hit a more than one-month low, making bullion less expensive for those holding other currencies. Meanwhile the benchmark 10-year note yields ended on Friday slightly above a six-week low.
“If economic fears further weigh on yields, gold could capitalise once more, with USD 1,870 being the first test and then USD 1,900,” said Craig Erlam, senior market analyst at OANDA.
“Sentiment in the markets remain extremely fragile but as long as focus is on the deterioration of the economic outlook rather than additional rate hikes being priced in, gold can continue to perform well.”
Investors now expect an eventual slowdown in the US monetary policy tightening after the Federal Reserve hikes interest rates in June and July.
However, the US Federal Reserve Governor Christopher Waller said on Monday that the Fed should be prepared to raise interest rates by a half percentage point at every meeting from now on until inflation is decisively curbed.
“Trading gold on a potential Fed pause more than a year on the horizon isn’t exactly an attractive proposition for money managers, particularly as quantitative tightening continues to sap liquidity from markets in the meantime,” analysts at TD Securities said in a note.
While gold is viewed as a hedge against higher inflation and safe store of value during political and financial uncertainties, higher rates raise the opportunity cost of holding non-yielding bullion.
Spot silver fell 0.6% to USD 21.96 per ounce, platinum rose 0.2% to USD 955.66 and palladium fell 1.2% to USD 2,038.03.
Federal government offices, stock and bond markets are closed on Monday for the Memorial Day holiday in the United States.
(Reporting by Eileen Soreng in Bengaluru; Editing by Alison Williams and Alistair Bell)