LONDON: Gold rose on Wednesday as renewed fears of a recession bolstered bullion’s allure as a safe haven and countered pressure from a firmer dollar, while investors awaited monetary policy cues from the Federal Reserve.

Spot gold reversed initial declines to rise 0.4% to $1,839.86 per ounce by 1145 GMT, while US gold futures gained 0.2% to $1,841.70.

World stocks fell as concerns of rising interest rates and recession persisted.

Adding to this, soaring food prices pushed British consumer price inflation to a 40-year high of 9.1% last month.

“You have all the fears of rising recession risks and inflation providing quite a sound backdrop in terms of safe haven demand; not that everybody’s rushing into gold, but people are clearly sticking to gold positions at the moment, said Carsten Menke, head of Next Generation Research at Julius Baer.

“But on the negative side, you have that very aggressive monetary tightening, most notably by the US Fed,” Menke added,

Limiting advances in gold, the dollar index rose 0.1%, making bullion expensive for overseas buyers.

Powell is scheduled to testify before Congress on Wednesday and Thursday after the central bank lifted its benchmark interest last week by 75 basis points (bps) to try to tame inflation.

If Powell clears the way for another 75 bps rate hike in July, it would likely trigger further dollar strength and rises in yields, resulting in downside for gold, said Ricardo Evangelista, a senior analyst with ActivTrades.

“Otherwise, and this is the most likely scenario, should the chairman avoid such bouts of hawkishness, gold prices are likely to remain relatively stable,” Evangelista added.

Higher interest rates increase the opportunity cost of holding non-yielding gold.

Silver fell 0.9% to $21.47 per ounce, platinum dropped 0.2%, to $935.75.

Palladium inched 0.4% higher to $1,884.34.