NEW YORK: Gold prices rose 1% on Tuesday, helped by a retreat in the dollar and hopes for less aggressive rate hikes from the US Federal Reserve going forward.
Spot gold rose 0.6% to $1,750.40 per ounce by 12:16 p.m. ET (1716 GMT). US gold futures also gained 0.6% to $1,750.50.
The dollar was down 0.1% against its rivals, making gold less expensive for other currency holders.
With the bulk of rate hikes from the Fed being priced in, investors are now seeing light at the end of the tunnel in terms of an end to the hikes, said David Meger, director of metals trading at High Ridge Future.
The US central bank delivered a fourth consecutive 75-basis-point rate hike earlier this month to tame soaring inflation.
Now, Fed funds futures have priced in a 63.5% chance of a 50 basis-point hike at a policy meeting this month, and an 88% chance of another such rate hike in February.
Investor focus will be on Fed Chair Jerome Powell’s speech at a Brookings Institution event on Wednesday that could offer more clarity on the central bank’s policy stance.
Gold is sensitive to rising interest rates as they increase the opportunity cost of holding the non-yielding asset.
“A potential recovery in the dollar and still-rising interest rates around the world means investors might shy away from low- and zero-yielding assets like gold,” Fawad Razaqzada, market analyst at City Index, said in a note.
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