By Kavya Guduru
(Reuters) – Gold prices regained some ground on Monday but a firmer dollar and concerns that the U.S. Federal Reserve might keep hiking interest rates kept bullion below the key $1,900-an-ounce level.
Spot gold was up 0.6% at $1,876.61 per ounce, as of 0540 GMT, after hitting its lowest level since Jan. 6 earlier in the session. U.S. gold futures rose 0.7% to $1,888.80.
Bullion prices had dropped more than 2% on Friday after data showed U.S. job growth accelerated sharply last month and the unemployment rate hit a more than 53-1/2-year low of 3.4%.
“Markets were initially looking for the first (rate) cut to come in 3Q 2023 (post-FOMC but prior to non-farm payrolls release), but expectations for the first cut have now been pushed back to November-December 2023,” said OCBC FX strategist Christopher Wong.
“Markets are now expecting the Fed to keep peak rate (still around 5%) on hold for longer. This could depress gold’s appeal in the interim.”
Those bets helped the dollar index rise 0.2%, adding pressure on gold by raising its cost for buyers holding other currencies. [USD/]
Rising U.S. interest rates tend to dim the appeal of gold as they increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which bullion is priced.
“We see (gold) prices ranging between $1,820-$1,950, but looking ahead, we are more constructive, especially once focus reverts (as we think it will) to the likelihood of falling rates and a weaker dollar,” Edward Meir, a metals analyst at Marex, wrote in a monthly note.
Spot silver rose 0.5% to $22.47 per ounce, platinum edged up 0.1% to $973.45 and palladium added 0.3% to $1,628.63.
“Among PGMs, supply disruptions in South Africa due to a deepening energy crisis should help to stabilise prices in the short term,” ANZ said in a note.
(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu)
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Source: The Print