Gold eases as dollar dip offers no respite from rate-hike fears

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Gold edged lower on Wednesday as

pressure from aggressive monetary policy worries and higher bond

yields outweighed relief stemming from a pullback in the dollar.

Spot gold dipped 0.3% to $1,706.85 per ounce by 0610

GMT. U.S. gold futures also fell 0.3% to $1,706.00.

The dollar eased for a fourth straight session,

though it stayed at elevated levels, making greenback-priced

bullion less expensive for buyers holding other currencies.

Gold seems to be the odd person out, not participating in

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any broader relief rally on a lower dollar, said Stephen Innes,

managing partner at SPI Asset Management, adding that central

banks’ front-loaded rate hikes are clearly tarnishing bullion’s

appeal.

European Central Bank (ECB) policymakers are considering

raising rates by a larger-than-expected 50 basis points at their

meeting on Thursday to tame record-high inflation, two sources

with direct knowledge of the discussion told

Reuters.

Since the dollar is reacting to a (possibly) more aggressive

rate hike by the ECB, gold isn’t getting the bounce one would

typically expect via a softer greenback, Innes said.

Although gold is seen as an inflation hedge, higher interest

rates and bond yields raise the opportunity cost of holding

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bullion, which yields no interest.

Benchmark U.S. 10-year Treasury yields steadied after two

sessions of gains.

Spot gold may retest a resistance at $1,721 per ounce, a

break above which could lead to a gain into $1,728-$1,739 range,

according to Reuters’ technical analyst Wang Tao.

Meanwhile, Asian shares extended a global rally as strong

U.S. corporate earnings and the expected resumption of Russian

gas supplies to Europe helped lift sentiment and ease fears of a

recession.

Spot silver was little changed at $18.74 per ounce,

platinum was flat at $874.61, and palladium gained

0.5% to $1,884.66.

(Reporting by Bharat Govind Gautam in Bengaluru; editing by

Uttaresh.V)