Gold rebounds above 10-month low as US dollar weakens

NEW YORK/LONDON — Gold prices turned higher after falling to their lowest in more than 10 months on Monday, as US Treasury yields came off their highs and the US dollar fell ahead of the Federal Reserve meeting.

The Fed is widely expected to hike interest rates for only the second time in a decade at a two-day meeting that begins on Tuesday, with a statement scheduled for Wednesday at 2 p.m. EST (1900 GMT). Bets are now being placed on the timing of further rate hikes next year.

Spot gold rose 0.30% at $1,161.62 an ounce by 2:49 p.m. EST (1949 GMT) after tapping its lowest since Feb. 5 at $1,151.34 an ounce.

US gold futures settled up 0.30% at $1,165.80 per ounce.

The US dollar index fell on concerns that the Fed could suggest that the greenback’s gains had gone too far.

“What everyone is waiting for is not so much whether a rate hike will happen, but what the language reveals going forward on future rate hikes,” said Walter Pehowich, executive vice-president in charge of precious metals investments services for Dillon Gage Metals.

“In the event that the Fed has little to say on future rate increases, gold should get a boost and rally from this very important support level.”

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding nonyielding assets such as bullion.

Physical demand also waned from major consumers China and India.

“If we were seeing volume from those two buyers as prices fell you would be a bit more positive about the prospects of gold finding a floor, but both those markets are pretty weak,” said ICBC Standard Bank Analyst Tom Kendall.

Among other precious metals, silver was up 1.40% at $17.09 an ounce, while platinum rose 1.60% to $928.74. Palladium turned down 0.70% at $724.40. —