Nov 1 (Reuters) – Gold rose over 1% on Tuesday as the US dollar and bond yields slipped from session highs, with the focus turning to a key Federal Reserve announcement for cues on whether it would scale back or retain its aggressive stance on interest rates hikes.
Spot gold rose 0.9% to USD 1,647.24 per ounce by 3:14 p.m. ET (1914 GMT), going as high as USD 1,696.94 earlier in the session. US gold futures settled up 0.6% at %1,649.70.
“Gold is in a position here where it’s keeping a good chunk of today’s gains going into the FOMC (Federal Open Market Committee meeting),” said Edward Moya, senior analyst with OANDA.
“The labor market is going to cool, it’s just not happening as quickly as people thought and that should keep the Fed’s path to slowing rate hikes in place – it might not be in December, but it probably will be at that February meeting.”
The dollar index pulled back from its one-week peak.
Benchmark 10-year Treasury yields also slipped on speculation that the Fed might signal a slower pace of policy tightening this week, even as it is expected to raise interest rates by another 75 basis points.
Gold is highly sensitive to rising rates as they increase the opportunity cost of holding the non-yielding bullion.
Prices have declined about 21% since rising past the USD 2,000 per ounce level in March, due to rapid rate hikes from the Fed.
“We continue to believe that gold will ultimately break below the USD 1,600 per ounce mark, but I think for now there is probably bit of resistance around USD 1,675-USD 1,680,” said Bart Melek, head of commodity markets strategy at TD Securities.
Meanwhile, spot silver rose 2.6% to USD 19.64 per ounce, after hitting a three-week peak.
Platinum climbed 2.2% to USD 945.93, while palladium advanced 2.3% to USD 1,883.13.
(Reporting by Seher Dareen, Swati Verma and Brijesh Patel in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)
This article originally appeared on reuters.com