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Gold rose on Monday after a weaker dollar made bullion more attractive to foreign investors, although prices were near three-month lows as traders assessed the prospects of the US Federal Reserve raising interest rates.
Spot gold rose 0.3 percent to $1926.19 an ounce by 0538 GMT. US gold futures rose 0.3% to $1,936.00.
Bullion fell nearly 2% in the previous week as hawkish rhetoric from Fed officials suggested more interest rate hikes to tame sticky inflation.
Higher interest rates make non-yielding gold less attractive.
“We are nearing the end of the tightening cycle, but we are not quite at the end as there is still a risk of its extension, hence the lower price action,” said Christopher Wong, Strategist at OCBC FX.
Investors now expect a 72% chance of a rate hike in July, with rate cuts from 2024 onwards, according to CME’s Fedwatch tool.
The dollar index fell 0.2 percent.
However, Citi analysts said in a note that the downward trend in gold was “partly offset by strong physical depreciation from central banks and China and some recession hedges.”
CFTC data on Friday showed that speculators increased their record net position in gold on the Comex by 1,322, to 94,626, in the week ended June 20.
Oil prices rose slightly as troubles over the weekend in Russia raised questions about the supply of crude oil, but left investors reluctant to draw any further conclusions.
The Wagner fallout with Russia certainly added impetus to the gold market in early Asia. “With this quickly declining, gold is holding up,” said Clifford Bennett, chief economist at ACC Securities.
Spot silver jumped 1.5% to $22.75 an ounce, while platinum rose 1.3% to $928.74.
Palladium in the autocatalyst rose 0.8 percent to $1,294.59.
“We expect the downtrend (in palladium) to continue… but we also note increasing risks of shorting in the event of any supply disruption or sudden surge in demand,” Citi analysts added.
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