Gold prices fall from multi-month highs

Jan 17 (Reuters) – Gold prices on Tuesday fell from a more than eight-month peak hit in the previous session on hopes that the US Federal Reserve would adopt a less aggressive approach to rate hikes going forward.

Spot gold fell 0.7% to USD 1,904.87 per ounce by 1:42 p.m. ET (1842 GMT), after hitting its highest since the end of April on Monday. US gold futures settled down 0.6% at USD 1,909.9.

The US dollar index rose 0.2%. A stronger dollar makes gold more expensive for other currency holders.

“We’re looking at this as more of a slight pullback within our sideways-to-higher trend. We believe the combination of the weaker dollar and sticky inflation concerns continues to support our underlying positive environment,” said David Meger, director of metals trading at High Ridge Futures.

With lower rates translating into lesser returns on interest-bearing assets such as government bonds, investors may prefer zero-yield gold.

Traders expect 90.6% odds of a 25-basis point rate hike from the Fed in February and see rates peaking at 4.94% in June, while most Fed officials see rates landing north of 5% into the next year.

Citigroup Inc. Chief Executive Officer Jane Fraser said in an interview with CNBC that the US Federal Reserve could slow rate hikes in late spring or early summer.

Meanwhile, China saw economic growth slumping in 2022, but officials at the World Economic Forum said the country’s reopening could drive global growth beyond expectations.

Gold buying in China normally picks up ahead of the Lunar New Year holidays, which run from Jan. 21.

“We expect gold prices to trend around USD 1,950/oz in 2023,” Goldman Sachs said in a note dated Friday.

On the US economic calendar, producer price index (PPI) data, retail sales, and manufacturing output readings are expected tomorrow.

Elsewhere, spot silver slipped 2.1% to USD 23.88 per ounce, platinum dropped 2.2% to USD 1,038.79 and palladium was down 0.6% to USD 1,741.00.

(Reporting by Seher Dareen in Bengaluru; Editing by Devika Syamnath and Emelia Sithole-Matarise)