Gold steadies near three-month high on hopes of smaller Fed hikes

Gold steadies near three-month high on hopes of smaller Fed hikes
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BENGALURU (Nov 15): Gold hovered near a three-month high on Tuesday (Nov 15), as a top US central bank official's comment raised hopes that the US Federal Reserve (Fed) would adopt a less aggressive approach to rate hikes, while an uptick in the dollar kept gains in check.

Spot gold was flat at US$1,771 (RM8,124.46) per ounce as of 0228 GMT, after hitting its highest since Aug 17 on Monday.

US gold futures edged 0.2% lower to US$1,774.30 per ounce.

"Gold has had a very strong run from US$1,618 per ounce, and is now due for some consolidation in the short term. However, the overall dominant risk remains very much to the upside," said Clifford Bennett, the chief economist of ACY Securities.

"The catalyst for the recent strong rally was partially the correction of the US dollar."

Gold prices have risen US$150, or nearly 10%, since falling to a one-month low earlier this month, as data showing an uptick in the US unemployment rate in October and signs of cooling inflation led to Fed slowdown optimism.

The Fed will likely soon slow its interest rates hikes, its vice-chair Lael Brainard signalled on Monday, but emphasised that the central bank still had more work to do.

Traders now see an 89% probability of a 50-basis-point increase in the US central bank's December meeting, with only an 11% likelihood of a 75-basis-point rise.

While gold is considered a hedge against inflation, rising interest rates tend to dull bullion's appeal as the metal pays no interest.

Capping the gains, the dollar index rose 0.3% against its rivals, making gold more expensive for other currency holders.

Speculators cut net short positions by 30,659 contracts to 8,219 in Comex gold in the week to Nov 8, the US Commodity Futures Trading Commission said.

Spot silver rose 0.2% to US$22 per ounce. Platinum gained 0.2% to US$1,019.50, while palladium was steady at US$2,025.