Gold flat as firm dollar, U.S. rate-hike outlook dent appeal

Gold prices were flat on Tuesday, pinned near a one-week low hit in the previous session, as a firmer dollar and the prospect of further oversized rate hikes by the U.S. Federal Reserve sapped the zero-yielding asset’s appeal.

Spot gold was flat at $1,668.29 per ounce, as of 0143 GMT. Prices fell 1.6% on Monday, their biggest one-day percentage decline since Sept. 23.

U.S. gold futures rose 0.3% to $1,679.60 per ounce.

The dollar index was up 0.2%, making the greenback-priced bullion more expensive for those holding other currencies.

The U.S central bank is clear on the need for restrictive monetary policy to lower inflation, Fed Vice Chair Lael Brainard said on Monday, but the path and pace of rate increases will remain “data-dependent” as the central bank monitors the economy and the evolution of domestic and global risks.

After a stronger-than-expected U.S. labor data focus in now on inflation reading, due on Thursday, which is expected to remain stubbornly high.

While gold is considered a hedge against inflation and economic uncertainties, rising interest rates reduce appeal for the asset, which pays no interest.

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said inflation remained a continuing problem after Russia’s invasion of Ukraine.

Spot silver fell 0.4% to $19.57 per ounce, platinum dipped 0.1% to $897.50 and palladium rose 0.2% to $2,176.00.