Gold prices rose on Tuesday, buoyed by a pullback in the dollar and safe-haven buying due to worries about an economic slowdown, though the gains were capped by prospects of aggressive rate hikes to tame inflation.
Spot gold was up 0.4% at $1,717.09 per ounce as of 0358 GMT, having risen nearly 1% earlier in the session.
U.S. gold futures gained 0.4% to $1,729.10.
The dollar index was unchanged after touching a 20-year peak in the previous session.
“There’s been a bit of a safe-haven buying emanating out of this sort of burgeoning energy crisis in Europe,” said ANZ Senior Commodity Strategist Daniel Hynes.
However, “it’s probably going to be a struggle to maintain any upward move considering the hawkish Fed (Federal Reserve) that we’ve got.”
The euro zone is almost certainly entering a recession, with surveys on Monday showing a deepening cost-of-living crisis and a gloomy outlook that is keeping consumers wary of spending.
News that the Nord Stream 1 pipeline, Europe’s major supply route, would remain shut also stoked fear of a recession in the region, with consumers hurt by soaring energy prices.
Investors now eye the European Central Bank’s rate action when it meets on Thursday, while a hefty interest rate hike is also expected from Fed’s Sept. 20-21 policy meet.
Even though gold is seen as a hedge against inflation and economic uncertainties, higher U.S. interest rates increase the opportunity cost of holding the non-yielding bullion and boosts the dollar.
Spot gold might retest a resistance at $1,727 per ounce, a break above which could lead to a gain to $1,736, according to Reuters technical analyst Wang Tao.
Spot silver rose 0.6% to $18.27 per ounce, platinum was 0.6% higher at $850.73 and palladium gained 0.7% to $2,047.96.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)