Gold dips as dollar makes slight recovery
Bengaluru — Gold edged lower on Tuesday, as the US dollar rebounded slightly after a slide in the previous session, weighing on demand for greenback-priced bullion.
Spot gold fell 0.2% to $1,850.40 an ounce by 2.40am GMT, after rising to its highest since May 9 of $1,865.29 on Monday. US gold futures were flat at $1,848.20. The safe-haven dollar clawed back some of its overnight losses. A stronger dollar makes bullion more expensive for overseas buyers.
“The weaker dollar has helped gold break back above its 200-day average and we’re not yet convinced the greenback has seen a low,” City Index senior market analyst Matt Simpson said.
Kansas Federal Reserve Bank president Esther George said on Monday she expects the US central bank to lift its target interest rate to about 2% by August, with further action dependent on how both supply and demand are affecting inflation.
Bullion, seen as a safe store of value during times of economic crises, tends to become less attractive to investors when US interest rates are raised because it yields nothing.
“Gold continues to look oversold to my eyes and the daily close (on Monday) above the 200-day average is constructive for bulls,” Simpson said.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.44% to 1,068.07 tonnes on Monday from 1,063.43 tonnes on Friday. Benchmark US 10-year treasury yields eased, limiting losses in zero-yield gold.
Spot silver dipped 0.3% to $21.71 an ounce, and platinum eased 1.3% to $946.00, while palladium edged up 0.1% to $1,994.50. Russia’s Nornickel on Monday cut its estimate for the global palladium market deficit in 2022 due to lower demand from the car industry amid the Ukraine crisis and a slow recovery of the chip market from shortage.
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