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BENGALURU: Gold advanced to a one-week high on Wednesday as the dollar pulled back, although fears of further US interest rate hikes on the back of stubbornly high inflation worldwide kept a lid on prices, according to Reuters.
Spot gold extended its gains to a third session, rising 0.4 percent to $1,834.75 per ounce, as of 0701 GMT. US gold futures rose 0.3 percent to $1,842.90.
“Gold is oversold over the near-term, having found support at its 200-day exponential moving average, and the US dollar is due a pullback against February’s gains,” said Matt Simpson, a senior market analyst at City Index.
“Next stop for gold could be the $1,850-$1,860 area, at which point we’ll be on the lookout for another top.”
The yellow metal marked its worst month since June 2021 in February after a string of US data pointed to a resilient economy and a tight labor market, stoking fears that the US Federal Reserve would deliver more interest rate hikes to curb inflation.
High interest rates dampen gold’s appeal as an inflation hedge while raising the opportunity cost of holding the non-yielding asset.
Money markets expect the US central bank’s target rate to peak at 5.420 percent in September, from a current range of 4.50 percent to 4.75 percent. Chances of rate cuts this year have been largely priced out.
US consumer confidence unexpectedly fell in February, with the decrease concentrated among lower-middle-income households, a survey showed on Tuesday.
The dollar index was down 0.2 percent, making bullion more affordable for buyers holding other currencies.
Meanwhile, data on Wednesday showed top bullion consumer China’s manufacturing activity expanded at the fastest pace in more than a decade in February, smashing expectations as production zoomed after the lifting of COVID-19 restrictions late last year.
Spot silver added 1 percent to $21.13 per ounce, platinum gained 1.1 percent to $962.96 and palladium climbed 2 percent to $1,444.77.