Gold climbs as dollar edges lower, markets await Fed rate hike path

  • U.S. dollar down 0.4%
  • Markets pricing in Fed 25 bps rate hike in May

April 18 (Reuters) – Gold prices rose on Tuesday, buoyed by a weaker dollar, while investors looked for more clarity on the U.S. Federal Reserve’s rate hike path ahead.

Spot gold rose 0.4 % to $2,002.72 per ounce by 0909 GMT. U.S. gold futures were also up 0.4% to $2,015.40.

“Gold’s near-10% year-to-date climb has been largely predicated on its role as a safe haven as markets kept a wary eye over recession and financial instability risks,” said Han Tan, chief market analyst at Exinity.

Bids for a fresh record high may be curtailed until there is greater certainty to Fed rate cuts later this year, Tan added.

The dollar , raising expectations of the U.S. central bank hiking rates in May.

This weighed on gold, pushing it to a two-week low, as a stronger dollar makes gold more expensive for holders of other currencies.

Benchmark yields were near three-week highs. Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim the non-yielding bullion’s appeal.

The CME FedWatch tool shows that markets are pricing in an 85.4% chance of a 25 basis point hike in May.

With the majority of U.S. data over the past few days pointing to an economic slowdown and a weakening dollar, the background influences remain supportive for gold, said StoneX analyst Rhona O’Conell in a note.

Focus will now be on comments from Fed officials this week before they enter a blackout period from April 22, ahead of the central bank’s May 2-3 meeting.

Markets will also watch for reports from big U.S. banks later in the day after stellar results from other banks last week. .

Spot silver rose 0.1% to $25.13 per ounce, platinum gained 0.8% to $1,056.81 while palladium shot up 3.3% to $1,610.66.

Reporting by Kavya Guduru in Bengaluru; editing by Uttaresh Venkateshwaran

Our Standards: The Thomson Reuters Trust Principles.

Seher Dareen

Thomson Reuters

Seher oversees and writes market reports with the commodities and energy team in Bangalore round-the-clock and monitors newsworthy events in the resources space.