Gold prices recovered on Tuesday as the dollar moved away from recent two-decade highs, rekindling demand for greenback-priced bullion while investors wait for key US inflation data that could impact the Federal Reserve’s monetary policy.
Spot gold was up 0.3% at $1,859.00 per ounce by 0810 GMT.
US gold futures were little changed at $1,859.00.
The dollar edged lower after touching a 20-year high overnight, which pushed gold prices down by more than 1% in the previous session.
An stronger dollar makes safe-haven bullion less attractive for other currency holders.
Gold was finding technical support at $1,850, trading firm City Index’s senior market analyst Matt Simpson said.
Simpson said large moves in either direction in major markets were unlikely ahead of US consumer price index (CPI) data - the key indicator of inflation - due on Wednesday, possibly keeping the dollar near recent highs and pinning gold to near recent lows.
Last week, the US Federal Reserve raised its benchmark overnight interest rate by half-a-percentage point as it moves to unwind ultra-easy pandemic-era monetary policy and attempts to combat soaring inflation.
The monthly CPI data will be closely watched for any impact it could have on the US central bank’s rate-hike plans.
Gold is seen as a hedge against inflation and a safe store of value during times of political and economic crises, but is highly sensitive to rising short-term US interest rates, which raise the opportunity cost of holding non-yielding bullion.
Looking ahead, the drivers are straightforward for a downtrend in bullion as the potential for higher rates and a stronger dollar have overwhelmed any safe-haven appeal of gold, said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.
Spot silver gained 0.6% to $21.91 per ounce, platinum rose 1.3% to $954.98, and palladium climbed 2.1% to $2,140.90.
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