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Meanwhile, the dollar was down 0.2% against its rivals, making gold less expensive for other currency holders.
With the bulk of rate hikes from the Fed being priced in, investors are now seeing light at the end of the tunnel in terms of an end to the hikes, said David Meger, director of metals trading at High Ridge Future, in a Reuters interview.
The US central bank delivered a fourth consecutive 75-basis-point rate hike earlier this month to tame soaring inflation. However, traders are now pricing in a 50-basis-point increase at the Fed’s December meeting after minutes of the last policy meeting signalled a slower pace of hikes.
Investor focus will be on Fed Chair Jerome Powell’s speech at a Brookings Institution event on Wednesday, which could offer more clarity on the central bank’s policy stance.
“A potential recovery in the dollar and still-rising interest rates around the world means investors might shy away from low- and zero-yielding assets like gold,” Fawad Razaqzada, market analyst at City Index, said in a note.
Traders also kept a close tab on unrest in top bullion consumer China as police were out in force in Beijing and Shanghai to prevent more protests against covid-19 curbs.
(With files from Reuters)