PRECIOUS-Gold rises on hopes of slower interest rate hikes

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Gold hits highest since Oct. 13

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Fed policy key to bullion price gains, analyst says

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Focus also on U.S. GDP and inflation numbers this week

(Updates prices)

Oct 26 (Reuters) – Gold prices jumped on Wednesday as the dollar and bond yields weakened amid expectations that the U.S. Federal Reserve could slow its rapid pace of interest rate hikes.

While the Fed is still widely expected to deliver a rate increase of 75 basis points in November, it is also likely to debate how much higher it can safely push borrowing costs.

Spot gold was up 0.8% at $1,665.73 per ounce by 1233 GMT, after touching its highest since Oct. 13. U.S. gold futures gained 0.7% to $1,670.00.

“Spot gold is attempting to capitalise on the U.S. dollar’s recent pullback as market participants continue to test the dovish pivot narrative,” said Han Tan, chief market analyst at Exinity.

“Meaningful signs that the bulk of the Fed rate hikes are over should translate into a further recovery for bullion.”

Data on Tuesday showed that U.S. consumer confidence ebbed in October, home prices fell sharply in August and there were signs that the Fed’s aggressive stance was starting to cool the labour market.

Taking cues from the data, yields on the 10-year Treasury note fell, while the dollar index touched its lowest since Sept. 20, lifting gold’s appeal for those holding other currencies.

Gold needs to break above $1,735 before an end to the month-long downtrend can be called, said Saxo Bank analyst Ole Hansen.

“Speculators and investors, however, are likely to remain mostly sidelined until we get a clearer view on the thinking within the Federal Reserve,” he said.

Investors are also focusing on U.S. GDP and a European Central Bank meeting on Thursday, followed by U.S. core inflation numbers on Friday.

In other precious metals, spot silver rose 0.7% to $19.47 per ounce, platinum added 2.1% to $934.00, and palladium climbed 1.5% to $1,952.19. (Reporting by Arundhati Sarkar in Bengaluru Editing by David Goodman and Jan Harvey)