Gold prices reversed course to trade higher on Monday as a dollar rally lost its steam, having pushed bullion to one-month lows earlier in the session after the U.S. Federal Reserve signalled higher interest rates.
Spot gold rose 0.3% to $1,742.83 per ounce by 10:09 a.m. ET (1409 GMT). Prices touched their lowest since July 27 at $1,719.56 earlier in the session.
U.S. gold futures up 0.2% to $1,752.90.
"Gold sold-off after Powell's speech and right now the uptick is due to pure bargain hunting as well a pull-back in the dollar... Gold will soon start trading in a small range till further clues from the Fed," said Bob Haberkorn, senior market strategist at RJO Futures.
The dollar fell 0.2%, slightly easing off two-decade highs, making gold less expensive for other currency holders. [USD/]
In a speech at Jackson Hole, Wyoming, Powell said the Fed will raise rates as high as needed to curb inflation.
Market participants are now largely pricing in a 75-basis-point rate hike at the Fed's September meeting.
Gold is considered an inflation hedge, but the non-yielding asset's appeal dims amid a high-interest rate environment.
"Gold bulls' upside price objective is to make a form above solid resistance at $1,800 and bears' near-term downside price objective is pushing futures prices below solid technical support at $1,700," said Jim Wyckoff, senior analyst at Kitco Metals.
Capping gains in gold, benchmark U.S. Treasury yields were higher for the day. [US/]
"The U.S. is headed into a recession, the Fed can't be aggressive then; once the market gets further confirmation on that, gold will start to rise," Haberkorn added.
Meanwhile, Goldman Sachs slashed the British growth forecast and expects a recession to begin later in the year.
Spot silver fell 0.5% to $18.79 per ounce, and platinum rose 0.6% to $868.80.Palladium rose 1.1% to $2,133.33.