Gold prices gain on hopes of smaller US rate hikes

GOLD prices edged higher on Monday (Jan 9) and hovered near a seven-month high, supported by a weaker dollar and hopes that the Federal Reserve might slow its pace of interest rate hike.

Spot gold was up 0.2 per cent at US$1,868.89 per ounce, as of 0016 GMT. US gold futures also inched 0.2 per cent higher at US$1,873.80.

The dollar index was down 0.2 per cent, making gold cheaper for overseas buyers.

Data showed on Friday that the US economy added jobs at a solid clip in December, as the labour market remains tight, but Fed officials could draw some solace from a moderation in wage gains.

US services industry activity contracted in December for the first time in more than 2-1/2 years amid weakening demand, offering more evidence that inflation was abating.

Higher interest rates dim gold’s allure as an inflation hedge and raise the opportunity cost of holding the non-yielding bullion.

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Retail gold buying in major Asian hubs was slow on higher prices at the start of last week, while demand was seen picking up in top consumer China on the back of reopening and the upcoming Lunar New Year festival.

Spot silver gained 0.6 per cent to US$23.95, while platinum rose 0.5 per cent to US$1,094.97 while palladium fell 0.1 per cent to US$1,804.30. REUTERS