Gold retreats from nine-month high

Gold prices retreated from a nine-month high on Tuesday on a slight rise in the dollar and U.S. Treasury yields, although hopes of slower rate hikes by the Federal Reserve supported the market.

Spot gold was up 0.1 percent at $1,932.34 an ounce by 12:02 p.m. ET (1702 GMT), hitting its highest level since late April 2022 earlier in the session. U.S. gold futures rose 0.2 percent to $1,932.10.

The dollar index was 0.1% lower against rivals, making dollar-denominated bullion cheaper for many buyers, while yields on the benchmark 10 U.S. Treasuries retreated from a one-week high.

A survey by S&P Global showed that price pressures rose for the first time since last spring, indicating that inflation is far from contained despite the Fed’s aggressive measures to contain it.

“I think gold is still holding up quite strongly as market expectations shift more towards a Fed pause potentially or a shift to more accommodative policy,” said Ryan McKay, commodities strategist at TD Securities.

The US central bank made four consecutive rate hikes of 75 basis points (bps) before slowing to 50 bps last month to combat surging inflation.

Traders are now pricing in a 96% chance the Fed will raise rates by 25 bps at its policy meeting next week.

“As inflation expectations continue to decline, there will be less need for Fed rate hikes and the market is really focused on the idea of the Fed rate cycle ending,” said David Meger, director of metals trading at High Ridge Futures. .

Although gold is considered a hedge against economic uncertainties, higher interest rates tend to dampen the appeal of zero-yielding gold.

Elsewhere, spot silver rose 0.7% to $23.62 an ounce. Shares in the New York-based iShares Silver Trust rose 4% on Monday.

Platinum rose 1.1% to $1,058.38, while palladium jumped 2.2% to $1,741.09.



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