Gold firmed 1% on Thursday after a weaker dollar helped prices bounce back from a three-week low hit earlier in the session, although bets for more big US interest rate hikes cast a shadow on sentiment.
Spot gold was up 0.8% at $1,641.69 per ounce by 11:47 a.m. ET (1547 GMT), having slipped to its lowest since end-September earlier in the day. US gold futures also gained 0.8% to $1,647.80.
“It is still our opinion that if rates continue to creep higher as they do, it will continue to lean on the gold market in the near term,” said David Meger, director of metals trading at High Ridge Futures.
“The focus continues to be clearly on interest rates and Fed rate-hike expectations.”
The US Federal Reserve is widely expected to increase interest rates by 75 basis points at its policy meeting next month, after US consumer prices increased more than expected in September.
Higher US interest rates increase the opportunity cost of holding zero-yield bullion.
Cementing expectations of Fed rate hikes, the number of Americans filing new claims for unemployment benefits fell unexpectedly last week, indicating the labour market remains tight.
Boosting gold, the dollar index was down 0.7% against its rivals, making the metal less expensive for other currency holders.
Gold was also supported as European equity markets slid after UK Prime Minister Liz Truss said she was resigning.
Gold and silver prices are higher on modest upside corrections following recent selling pressure, Jim Wyckoff, senior analyst at Kitco Metals, said in a note.
“A weaker US dollar index and higher crude oil prices today are working in favor of the metals market bulls.”
Elsewhere, silver rose 2.3% to $18.87 per ounce, platinum jumped 3.3% to $913.18 and palladium was up 4.1% to $2,081.89.
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