Gold recovers from one-month low as US dollar backtracks

Aug 29 (Reuters) – Gold prices reversed course to trade higher on Monday as a dollar rally lost its steam, having pushed bullion to one-month lows earlier in the session after the US Federal Reserve signalled higher interest rates.

Spot gold rose 0.3% to USD 1,742.83 per ounce by 10:09 a.m. ET (1409 GMT). Prices touched their lowest since July 27 at USD 1,719.56 earlier in the session.

US gold futures up 0.2% to USD 1,752.90.

“Gold sold-off after Powell’s speech and right now the uptick is due to pure bargain hunting as well a pull-back in dollar… Gold will soon start trading in a small range till further clues from the Fed,” said Bob Haberkorn, senior market strategist at RJO Futures.

The dollar fell 0.2%, slightly easing off two-decade highs, making gold less expensive for other currency holders.

In a speech at Jackson Hole, Wyoming, Powell said Fed will raise rates as high as needed to curb inflation.

Market participants are now largely pricing in a 75-basis-point rate hike at the Fed’s September meeting.

Gold is considered an inflation hedge, but the non-yielding asset’s appeal dims amid high-interest rate environment.

“Gold bulls’ upside price objective is to make a form above solid resistance at USD 1,800 and bears’ near-term downside price objective is pushing futures prices below solid technical support at USD 1,700,” said Jim Wyckoff, senior analyst at Kitco Metals.

Capping gains in gold, benchmark US Treasury yields were higher for the day.

“The US is headed into a recession, Fed can’t be aggressive then; once the market gets further confirmation on that, gold will start to rise,” Haberkorn added.

Meanwhile, Goldman Sachs slashed British growth forecast and expects a recession to begin later in the year.

Spot silver fell 0.5% to USD 18.79 per ounce, and platinum rose 0.6% to USD 868.80.

Palladium rose 1.1% to USD 2,133.33.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri)