Gold prices hovered near a more than three-week high on Monday scaled in the previous session, helped by a weaker US dollar and lower bond yields on bets over less aggressive Federal Reserve rate-hike trajectory.
Spot gold was little changed at $1,764.32 per ounce, as of 0301 GMT, after hitting its highest since July 6 at $1,767.79 on Friday.
US gold futures eased 0.1% to $1,779.90 per ounce.
“USD has been on the back foot and driving gold higher. Expectations are coalescing around a rapidly slowing economy and hinting at less aggressive tightening,” said Stephen Innes, managing partner at SPI Asset Management.
“Rates markets priced out the more jumbo Fed hike scenario, and the pullback in US yields led to the unwinding of well-owned long USD positioning and short gold positions.”
Traders currently price about 31% probability that the Fed would keep its current 75 basis-point pace of rate hikes at its next meeting in September, with 69% odds for a smaller half point increase.
Making greenback-denominated gold less expensive for other currency holders, the dollar languished near three-week lows against its rivals.
Benchmark US 10-year Treasury yields were hovering near a four-month low.
“Gold had its biggest weekly gain since March amid speculation that the Fed will slow the pace of interest rates rises as the US economy slows,” ANZ analysts said in a note.
Focus will now be on monthly US jobs report due on Friday, which could influence Fed’s roadmap for fighting inflation.
Elsewhere, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.06% to 1,005.87 tonnes on Friday.
Disappointing Chinese economic data dented investors’ appetite for riskier assets.
Elsewhere, spot silver fell 0.7% to $20.17 per ounce, platinum was down 0.3% at $893.99, and palladium slipped 1.4% to $2,099.68.
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