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Gold dips as dollar firms, Fed rate-hike fears linger

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Gold prices slipped on Monday, weighed

down by a rebound in the U.S. dollar and expectations of further

interest rate hikes from the Federal Reserve to tame high

inflation.

Spot gold was down 0.4% at $1,794.78 per ounce, as of

0352 GMT, after rising about 1.6% last week. U.S. gold futures

fell 0.3% to $1,810.

The dollar erased earlier losses to gain 0.1% against

its rivals, making gold more expensive for buyers holding other

currencies.

“Gold looks like in some consolidation here for a week or

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two before resuming the upward march towards $2,000 yet again.

There may be even some who will feel the need to take profits to

offset property portfolio weakness,” said Clifford Bennett,

chief economist at ACY Securities.

“Gold is likely to be supported around $1,785. A slip to

$1,760 cannot be ruled out, but this would represent fantastic

long-term buying opportunity.”

Meanwhile, Richmond Fed Bank President Thomas Barkin said on

Friday he wanted to raise interest rates further to bring

inflation under control.

Investors will be watching out for minutes from the Fed’s

last monetary policy meeting due on Wednesday for more clues on

future rate hikes.

Traders were pricing in around a 44.5% chance of a

75-basis-point rate hike by the Fed in September and a 57.5%

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chance of 50 bps.

Although gold is seen as a hedge against inflation, rising

U.S. interest rates dull non-yielding bullion’s appeal.

“Gold recorded its fourth consecutive weekly gain amid

easing inflationary pressures. However, those same issues may

ultimately be a negative,” ANZ analysts said in a note.

Indicative of sentiment, holdings of SPDR Gold Trust ,

the world’s largest gold-backed exchange-traded fund, fell 0.15%

to 995.97 tonnes on Friday, their lowest since January.

Elsewhere, spot silver dropped 1% to $20.61 per

ounce, platinum fell 0.9% to $953.67, and palladium

was steady at $2,223.22.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu)

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