Gold prices on Tuesday were headed for their biggest monthly decline since June 2021 as a stronger dollar and fears that the U.S. Federal Reserve would keep raising interest rates weighed on the non-yielding asset's appeal.
Gold prices touched their highest since April 2022 in early February, but soon reversed course. Bullion has fallen more than 5% so far this month after strong economic data boosted expectations of more rate hikes.
Fed Governor Philip Jefferson said he was under "no illusion" that the U.S. central bank's fight to curb inflation would end soon.
Spot gold rose 0.4% to $1,824.49 per ounce by 10:36 a.m. ET (1536 GMT), helped by a pullback in the greenback on the day. U.S. gold futures also firmed 0.4% to $1,831.50.
The U.S. currency, however, remained on track for its first monthly gain in five, making gold more expensive for overseas buyers. [USD/]
In the next few weeks, the dollar and U.S. yields could ease and buoy gold, after which prices are likely to slip (as the Fed keeps hiking rates), and drop towards $1,700 per ounce, said Daniel Pavilonis, senior market strategist at RJO Futures.
People could use these recent lows as an opportunity to buy gold and get long, Pavilonis said.
Bullion prices are on track for their first monthly decline in four.
Gold is having a negative month as the market is expecting interest rates to remain higher for longer, said Carlo Alberto De Casa, external analyst at Kinesis Money.
"If inflation continues to rise, then gold might fall to the $1,730-$1,740 range."
Gold prices vs U.S. dollar https://fingfx.thomsonreuters.com/gfx/mkt/akveqooxmvr/New%20Feb%20Gold%20Chart.png
Spot silver gained 0.8% to $20.79 per ounce, and platinum firmed 0.7% to $944.91, while palladium dropped 1.2% to $1,414.11. All were set for monthly declines.
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