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Gold prices gave up initial gains to

slip on Monday as U.S. Treasury yields edged back up, while

investors positioned themselves for an expected 75-basis-point

interest rate hike by the Federal Reserve later this week.

Spot gold was down 0.6% to $1,716.02 per ounce by

11:52 a.m. ET (1552 GMT). U.S. gold futures dropped 0.7%

to $1,716.20.

The biggest factor influencing gold is the anticipation of

the Fed meeting, with U.S. second-quarter GDP numbers on

Thursday also likely to be a significant driver, said Daniel

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Pavilonis, senior market strategist at RJO Futures.

“Usually, ahead of the Fed, you see a sell-off in the metals

and that’s just normal.”

The Fed is expected to lift its benchmark overnight interest

rate by another 75 basis points at its July 26-27 meeting rather

than by a percentage point to quell stubbornly high inflation as

the likelihood of a recession over the next year rises to 40%, a

Reuters poll found.

Rising U.S. interest rates reduce the appeal of non-yielding

gold, even though it is considered a hedge against inflation.

Gold retreated on Monday despite a pullback in the dollar

index , which usually makes bullion more attractive for

overseas buyers.

However, unless the Fed hikes rates by 100 basis points,

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there is a possibility we will see further weakness in the

dollar and gains for gold, said Fawad Razaqzada, market analyst

at City Index.

In physical markets, top consumer China’s net gold imports

via Hong Kong jumped almost fivefold in June as banks stepped up

purchases and COVID curbs were relaxed.

Spot silver fell 1.1% to $18.39 per ounce.

While growing recessionary fears favor fund flows into the

dollar rather than gold, silver is struggling due to recent

challenges in the electronics sector, ANZ said in a note.

Platinum rose 0.4% to $877.34 per ounce, while

palladium slipped 0.9% to $2,012.64.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by

Shailesh Kuber and Paul Simao)