Gold prices rose on Tuesday as a rout in global equities prompted investors to seek shelter in safe havens such as gold, although expectations of more US rate hikes this year weighed on the market. Spot gold was up 0.3 percent to $1,342.95 per ounce at 0722 GMT following Monday's 0.5 percent gain.
Prices fell 1.2 percent on Friday, the most since December 7, 2017, after stronger-than-expected US payrolls data shored up expectations that a pick-up in inflation will spur further rate hikes this year, boosting the dollar, in which it is priced. US gold futures for April delivery rose 0.7 percent to $1,345.60 per ounce on Tuesday.
ANZ analyst Daniel Hynes said he suspected an even bigger rally in prices considering the correction in the equity markets. "The rate hikes have already been priced in by the market... but it's certainly got the ability to temper the upside in gold prices," Hynes said.
Gold is seen as a safe-haven investment due to its ability to retain value even at times of financial or political uncertainty. It is also used as a hedge against inflation. The yellow metal is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
Spot gold may retest a resistance at $1,354 as it seems to have stabilised around a support at $1,326 per ounce, according to Reuters technical analyst Wang Tao.
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