By Arundhati Sarkar
(Reuters) – Gold prices held steady with support from a softer dollar on Tuesday after the metal registered two sessions of gains, though investors remained cautious after recent hawkish comments from U.S. central bank officials indicating a need for higher interest rates.
Spot gold held its ground at $1,923.49 an ounce by 1014 GMT while U.S. gold futures were little changed at $1,933.10.
The dollar index eased slightly, making dollar-priced bullion more attractive for overseas buyers. [USD/]
“Gold is seeing slight relief from the easing U.S. dollar today, even as it adheres to the downtrend that’s been in place since early May,” said Han Tan, chief market analyst at Exinity.
“Spot gold may revisit sub-$1,900 levels in the near term if markets begin to take heed of (U.S. Fedreal Reserve) Chair Powell’s hawkish warnings and price in a second 25 bps rate hike by the Fed later this year.”
Bullion has shed about 2% this month – set for a second consecutive monthly fall if losses hold – as expectations of higher-for-longer interest rates in the United States have dented the zero-yielding asset’s appeal, even though it is seen as safe investment during economic uncertainty.
Market participants are now looking ahead to Fed Chair Jerome Powell’s speech before the European Central Bank Forum in Sintra at 1330 GMT on Wednesday.
Meanwhile, Julius Baer analyst Carsten Menke said that high interest rates are offering other alternatives than gold to safe-haven seekers.
In the broader market, European shares struggled to maintain positive momentum after Asian stocks were boosted by the Chinese government saying it would support the economy, with investors focused on concern over the European and U.S. economic outlook.
In other precious metals, spot silver rose 0.6% to $22.8964 an ounce and was on track for a third straight session of gains. Platinum advanced 0.5% to $928.72 and palladium was up 0.6% at $1,312.81.
(Reporting by Arundhati Sarkar and Seher Dareen in Bengaluru; Editing by Christina Fincher and David Goodman)
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