LONDON: Gold prices steadied on Monday but remained poised for their worst monthly showing since September as the US Federal Reserve’s plans for interest rate hikes boosted the dollar, driving away bullion investors.

Spot gold was last down 0.1% at $1,788.77 per ounce by 1015 GMT. US gold futures rose 0.2% to $1,789.60.

“The Fed’s hawkishness is largely unmatched by other major central banks, strongly supporting the dollar, which represents quite a headwind for gold,” ActivTrades senior analyst Ricardo Evangelista said.

The dollar index eased slightly but is still en route to a monthly gain, limiting gold demand as a firmer greenback makes bullion more expensive for holders of other currencies.

The US Federal Reserve plans to raise interest rates in March on the assumption the economy will largely steer clear of fallout from the Omicron coronavirus variant and keep growing at a healthy clip.

Although gold is considered a hedge against inflation, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

Gold has lost about 2.1% so far this month, its most since September last year.

January provided quite a good example of what’s driving gold, Julius Baer analyst Carsten Menke said, adding that initially there was a positive performance on rising inflation fears and then the Fed and its view of a strong economy reversed this, and brought prices back below $1,800.

“Our base case is still that the global economy is in recovery mode, which means that there is no strong case for safe haven demand... and that’s why prices should move rather lower than higher, even though we don’t see a lot of downside.”

Spot palladium was up 1.7% at $2,416.37, with the auto-catalyst metal set for a monthly gain of nearly 28%, its best since February 2008.

Silver gained 0.4% to $22.50 an ounce, while platinum firmed 0.2% to $1,009.41.