Gold set to snap 4-session losing run on dollar, yields pullback

(Reuters) – Gold prices rose on Tuesday, helped by a retreat in the dollar and benchmark U.S. Treasury yields in holiday thinned-trading, while investors awaited cues on the U.S. Federal Reserve’s monetary policy path.

Spot gold rose 0.2% to $1,741.18 per ounce by 11:09 a.m. ET (1609 GMT), on track to end a four-session declining run, while U.S. gold futures also edged up 0.2% to $1,742.70.

Bullion hit an over one-week low of $1,731.40 an ounce on Monday.

“I think the metals work their way out of this and continue to move higher. But right now it is a direct correlation with interest rates,” said Daniel Pavilonis, senior market strategist at RJO Futures.

U.S. Treasury yields eased on lingering concerns over more COVID infections in China, while investors waited for clues from the Fed’s minutes due tomorrow. [US/]

Traders widely expect the Fed to raise rates by 50 basis points in December, with some betting on a 28.9% chance of a 75-bps hike, according to CME Group’s FedWatch Tool.

Cleveland Fed President Loretta Mester said on Monday the central bank can downshift to smaller interest rate hike increments from next month, while San Francisco Fed President Mary Daly stated the policy rate was “modestly restrictive” with “more work to do.”

“The fact that interest rate increases are not yet pausing in the U.S. and elsewhere means holding gold is still an opportunity cost for foregoing fixed interest,” Fawad Razaqzada, market analyst at City Index, wrote in a note.

Making gold cheaper for overseas buyers, the dollar retreated from strong overnight gains. [USD/]

Spot silver rose around 1% to $21.04 per ounce, platinum gained 0.8% to $989.96 while palladium was up 0.2% to $1,868.31.

The World Platinum Investment Council forecast a deficit of the metal in 2023.