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Gold rises for 3rd session
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U.S. dollar index down 0.2%
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Fed rates seen peaking at 5.420% in Sept
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Palladium up 2%
(Adds details, updates prices)
By Kavya Guduru
March 1 (Reuters) -
Gold advanced to a one-week high on Wednesday as the dollar
pulled back, although fears of further U.S. interest rate hikes
on the back of stubbornly high inflation worldwide kept a lid on
prices.
Spot gold extended its gains to a third session,
rising 0.4% to $1,834.75 per ounce, as of 0701 GMT. U.S. gold
futures rose 0.3% to $1,842.90.
"Gold is oversold over the near-term, having found support
at its 200-day exponential moving average, and the U.S. dollar
is due a pullback against February's gains," said Matt Simpson,
a senior market analyst at City Index.
"Next stop for gold could be the $1,850-$1,860 area, at
which point we'll be on the lookout for another top."
The yellow metal marked its worst month since June 2021 in
February after a string of U.S. data pointed to a resilient
economy and a tight labour market, stoking fears that the U.S.
Federal Reserve would deliver more interest rate hikes to curb
inflation.
High interest rates dampen gold's appeal as an inflation
hedge while raising the opportunity cost of holding the
non-yielding asset.
Money markets expect the U.S. central bank's target rate to
peak at 5.420% in September, from a current range of 4.50% to
4.75%. Chances of rate cuts this year have been largely priced
out. U.S. consumer confidence unexpectedly fell in February, with
the decrease concentrated among lower-middle-income households,
a survey showed on Tuesday.
The dollar index was down 0.2%, making bullion more
affordable for buyers holding other currencies. Meanwhile, data on Wednesday showed top bullion consumer
China's manufacturing activity expanded at the fastest pace in
more than a decade in February, smashing expectations as
production zoomed after the lifting of COVID-19 restrictions
late last year.
Spot silver added 1% to $21.13 per ounce,
platinum gained 1.1% to $962.96 and palladium climbed 2% to $1,444.77.
(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu, Sherry Jacob-Phillips and Eileen Soreng)
