Gold flat as imminent rate hikes fend off bullion investors

Gold prices were largely unchanged on Tuesday as investors stayed away due to a softening inflation outlook and impending interest rate hikes from top central banks.

Spot gold was flat at $1,809.45 per ounce, as of 0305 GMT. U.S. gold futures rose 0.5% to $1,809.90.

Gold’s inflation-hedge appeal is tarnished by a softer inflation outlook, with looming global rate hikes also dimming the outlook for the non-yielding asset, said Stephen Innes, managing partner at SPI Asset Management.

Gold has been under pressure in the past few months as major central banks around the world move to hike interest rates in their attempt to tame runaway inflation.

Bullion prices have mostly been floating above the $1,800 support level after falling below it to a five-month low of $1,783.50 on Friday.

“While we are stuck in the $1,790 to $1,830 range, gold could be supported on recession worries and possibly the Federal Reserve softening their policy stance as the market pivots from inflation concerns,” Innes said.

Gold is seen as a safe store of value during times of economic crises, like a recession.

Resuming trade after a weekend extended by the Independence Day holiday on Monday, benchmark U.S. 10-year Treasury yields firmed, weighing on bullion prices.

The dollar steadied near two-decade peaks on Tuesday, and continued to keep buyers holding other currencies away from greenback-priced gold.

Asian shares, meanwhile, inched up, but persistent fears about global growth and elevated inflation levels kept gains firmly capped.

Looking ahead, U.S. data on employment and inflation will give investors a snapshot of the economy after 150 basis points of rate increases already delivered by the Fed. A disappointing jobs report could exacerbate concerns of a potential recession.

Spot silver gained 0.7% to $20.09 per ounce, while platinum fell 0.3% to $883.39, and palladium firmed 0.1% to $1,924.60.