Gold prices rose on Wednesday, buoyed by a slight dollar retreat from a two-decade high and as bargain hunters took advantage of recent declines, but the metal’s outlook remains clouded by the possibility of aggressive interest rate hikes.
* Spot gold added 0.9% to $1,716.59 an ounce by 1801 GMT, after falling to its lowest level since September 1 at $1,690.10.
* US gold futures were up 0.9% at $1,727.80 an ounce.
* The dollar index hit a 20-year high, making gold, which trades in that currency, less attractive to foreign buyers. However, a pullback from the late session peak seemed to give the metal some breathing room.
* The price of gold has fallen more than $300 since topping $2,000 in March.
* There could be some buying activity below $1,700, but as long as the Federal Reserve maintains its dovish tone, gold prices are expected to continue to slide, said Giovanni Staunovo, an analyst at UBS (SIX: UBSG ).
* Higher interest rates in the United States reduce the attractiveness of gold.
* Meanwhile, the European Central Bank is expected to decide this week on a second significant interest rate hike to rein in record inflation, just as the supply disruption of a major Russian gas pipeline further fuels inflation and recession fears in Europe.
* In other precious metals, added 1.9% to $18.40 an ounce; platinum gained 1.6% to $866.43 ; and rose 1.9% to $2,044.09.