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Gold firms as dollar rally pauses; looming rate-hike cap further gains

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By Eileen Soreng

(Reuters) – Gold prices rose on Monday after declining more than 1% in the previous session, as a pause in the dollar rally alleviated some pressure from the greenback-priced bullion, though looming U.S. rate hikes restricted further gains.

Spot gold rose 0.4% to $1,648.91 per ounce, as of 0405 GMT. The metal posted its biggest weekly decline since July last week.

U.S. gold futures were up 0.4% at $1,655.30.

The dollar index was flat, while the benchmark U.S. 10-year Treasury yields eased, moving away from the 14-year peak touched last week.

“Gold has lifted itself slightly from Friday’s low but buyers are lacking conviction, so looks more like technical repositioning,” said City Index analyst Matt Simpson.

“The U.S. dollar and yields will be a key driver for gold, and if they continue to rise then a move and test of $1,600 is likely just a matter of time.”

A survey from the University of Michigan on Friday showed consumer sentiment improved further in October, but inflation expectations deteriorated a bit, keeping expectations of another 75-basis-point rate hike intact.

U.S. retail sales were unexpectedly flat in September.

St. Louis Fed President James Bullard said on Friday that the latest CPI data warrants continued “frontloading” through larger rate hikes of three-quarters of a percentage point but that does not necessarily mean rates need to be raised above the central bank’s projections.

Gold is highly sensitive to rising U.S. rates, which increases the opportunity cost of holding non-yielding gold.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.18 tonnes on Friday, their biggest one-day outflow since Sept. 26.

Spot silver rose 0.7% to $18.39 per ounce, platinum was 0.3% higher at $901.67 and palladium gained 1.7% to $2,022.60.


(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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