By Seher Dareen
(Reuters) – Gold prices stalled after bouncing to their highest in three months on Tuesday on the dollar’s retreat, as softer U.S. inflation readings bolstered bets that the Federal Reserve may slow rate hikes.
Spot gold was steady at $1,772.19 per ounce by 10:23 a.m. ET (1523 GMT) after hitting its highest since Aug. 15 earlier. U.S. gold futures fell 0.1% to $1,775.40 per ounce.
“Inflation expectations continue to come down… (hence) the Fed is less likely to raise interest rates faster,” said David Meger, director of metals trading at High Ridge Futures.
As a result, yields have fallen and the dollar has been under sever pressure, helping drive gold’s upturn, Meger added,
The dollar index touched a three-month low, lifting gold’s appeal for those holding other currencies, while U.S. Treasury yields also slipped. [USD/][US/]
U.S. producer prices increased less than expected in October, further evidence that inflation was starting to subside.
While the Fed is expected to keep tightening its pandemic-era fiscal policy, traders are now pricing in a 91% chance of a 50-basis-point rate hike at the Fed’s December meeting.
Rising interest rates dim non-yielding bullion’s appeal.
Fed Vice Chair Lael Brainard on Monday echoed comments by Fed Governor Christopher Waller that interest rates needed to keep rising to battle inflation, but potentially at a slower pace.
“A solid rally well above $1,770 could encourage an incline towards the psychological $1,800 resistance level,” FXTM analyst Lukman Otunuga said.
Gold prices have risen more than $160 since falling to a more than one-month low earlier this month.
Among other precious metals, spot silver fell 1.1% to $21.735 per ounce after retreating from its highest since early June.
Platinum rose 0.3% to $1,020.63, and palladium jumped 2.4% to $2,074.11.
(Reporting by Seher Dareen and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber)
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