Gold steadied on Tuesday, supported by a slight pullback in the US dollar, although prices were stuck in a tight range as investors refrained from making big bets ahead of key central bank meetings this week.
Spot gold held its ground at $1,709.57 per ounce, as of 0528 GMT.
US gold futures eased 0.2% to $1,707.40.
The dollar shed earlier gains to trade just above a one-week low against its rivals, making greenback-priced bullion less expensive for buyers holding other currencies.
Spot gold may retest resistance at $1,721
“Gold remains in a comatose state, unable to sustain gains above $1,720 and unable to rally even as the US dollar fell overnight,” OANDA senior analyst Jeffrey Halley said.
“That keeps the technical picture for gold very negative. It has an initial support at $1,700, but a sustained break and a couple of daily closes below $1,675 signal a much larger fall is in play.”
Offering some respite to gold, expectations for a 100-basis-point rate hike by the Federal Reserve at its policy meeting next week stood at about 30%, according to CME’s FedWatch Tool after reaching as high as 80% last week. Market participants are now anticipating a 75-basis-point hike by the Fed at its July 26-27 meeting.
The European Central Bank and the Bank of Japan both are meeting on Thursday, with the ECB widely expected to deliver a 25-basis-point hike.
Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion, which yields no interest.
Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.5% to 1,009.06 tonnes on Monday, its lowest since late-January.
Elsewhere, spot silver rose 0.2% to $18.70 per ounce and platinum slipped 0.2% to $860.95, while palladium climbed 1.5% to $1,883.08.
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