Gold prices edged higher on Tuesday as the dollar pulled back slightly, but mounting worries over aggressive US rate hikes to control soaring inflation kept bullion near a one-month low.

Spot gold was up 0.2% at $1,738.79 per ounce, as of 0325 GMT, after hitting its lowest since July 27 at $1,727.01 on Monday. US gold futures gained 0.1% to $1,750.50.

The dollar eased 0.1% against its rivals after hitting a more than one-month high in the previous session, making gold less expensive for buyers holding other currencies.

“Concerns that Fed Chair Jerome Powell will deliver a hawkish message at the Jackson Hole Symposium alongside a recession warning has seen the US dollar surge and weigh on the yellow metal,” said Matt Simpson, a senior market analyst at City Index.

“A clear indication that gold investors are concerned is that the CBOE gold volatility index and downside protection – via put options – are both on the rise. I’m on guard for further losses and for gold’s potential to fall to $1,700.”

Rapid Federal Reserve rate hikes since March and hawkish comments on further tightening have dented bullion’s appeal as an inflation hedge. Gold prices have fallen more than $300 since scaling above the key $2,000-per-ounce level in early March.

Gold, other precious metals slump on rallying dollar

Powell will address the annual global central banking conference in Jackson Hole, Wyoming, on Friday, a highly anticipated speech that could signal how high US borrowing costs may go.

Fed funds futures are now pricing in a 58.5% chance of a 75-basis-point rate hike in September.

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

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% to 987.56 tonnes on Monday.

Elsewhere, spot silver fell 0.2% to $18.97 per ounce, platinum was steady at $875.81, and palladium climbed 1.4% to $2,023.20.