Gold rose on Tuesday as the dollar eased, with focus turning to minutes from the U.S. Federal Reserve’s November meeting for clues on future rate hikes.
Spot gold rose 0.4% to $1,745.13 per ounce, as of 0433 GMT. U.S. gold futures gained 0.4% to $1,746.00.
Gold recouped some losses from the previous session, when investors preferred the safety of the dollar amid fresh COVID-19 curbs in China.
On Tuesday, the dollar paused its advance, making gold cheaper for overseas buyers.
The Fed minutes are due at 1900 GMT, with most traders betting on a 50-basis point hike in December. Chances of a 75-bps hike were pegged at 19% following recent comments by Fed officials.
“With investors not expecting any new substantial information, the threat from the minutes is that the FOMC (Federal Open Market Committee) could put the pivot narrative in a hawkish wrapper, playing down any chance of a policy swing from tightening to easing,” said Stephen Innes, managing partner, SPI Asset Management.
But overall bets for more benign inflation should support gold investors betting on a borderline recession in the first half of next year and an eventual Fed pivot to rate cuts, Innes added.
Also helping gold, Cleveland Fed President Loretta Mester said the central bank can downshift to smaller rate hike increments from next month.
“Gold bulls were relieved” by Mester’s dovish remarks, Phillip Futures analyst Avtar Sandu said in a note.
While gold is considered an inflation hedge, high interest rates discourage investing in non-yielding bullion.
Innes said the only factor that may drive gold back below $1,700 was an “upside surprise in U.S. CPI.”
Silver advanced 1.4% to $21.14 per ounce, platinum added 1.4% to $995.63, while palladium rose 0.7% to $1,878.00.
The World Platinum Investment Council forecast a deficit of the metal in 2023.
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