Gold firms on softer dollar as spotlight shifts to Fed
GOLD edged higher on Tuesday (Jul 26), helped by a weaker dollar, but prices were stuck in a tight range as investors refrained from taking big positions ahead a possible US interest rate hike.
Spot gold was up 0.3 per cent at US$1,723.01 per ounce, as of 1.04 am GMT, while US gold futures were steady at US$1,719.80.
The dollar fell for a fourth straight session, down 0.1 per cent against a basket of major currencies, as investors weighed the implications of a rate hike by the Federal Reserve in an economy that may be on the verge of a recession.
A weaker dollar makes gold less expensive for buyers holding other currencies.
The US central bank is widely expected to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of that magnitude would effectively close out pandemic-era support for the economy.
Expectations for a hike of 75 basis points from the Fed stand at about 79 per cent, according to CME's Fedwatch Tool, with a 23 per cent chance of a 100-bp hike.
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Meanwhile, the European Central Bank may not be done with big interest rate hikes after its initial half-point hike last week, Latvian central bank governor Martins Kazaks said in an interview with Bloomberg News.
Rising interest rates increase the opportunity cost of holding non-yielding bullion.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.06 per cent to 1,005.29 tonnes on Monday from 1,005.87 tonnes on Friday.
Spot silver rose 0.3 per cent to US$18.46 per ounce, platinum gained 0.6 per cent to US$884.50, while palladium edged 0.1 per cent lower to US$2,005.89. REUTERS
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