Gold price rebounds as dollar, yields pull back

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Gold halted its slide on Monday, helped by a slight pullback in the US dollar and Treasury yields, even as fears lingered about more hefty Federal Reserve rate hikes to tame soaring inflation.

Spot gold rose 1.1% to $1,662.21 per ounce as of 10:55 a.m. ET, after declining more than 3% last week in its worst performance since July. US gold futures climbed 1.3% to $1,669.50 per ounce in New York.

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“Gold has benefited from USD weakness today, after the pound rebounded amid expectations that more of the tax cuts will be reversed,” Bank of China International analyst Xiao Fu told Reuters.

“Meanwhile, US Treasury yields moved lower. But with the US CPI remaining at elevated levels, the Fed could hike rates by another 75 basis points in early November and do further hikes in December. These could reintroduce macro headwinds for gold,” Fu added.

St. Louis Fed President James Bullard previously said that the latest CPI data warrants continued “frontloading” through larger rate hikes of three-quarters of a percentage point, but that does not necessarily mean rates need to be raised above the central bank’s projections.

Gold prices have fallen 20% since scaling above the key $2,000 per-ounce level in March as rapid Fed rate hikes weighed on bullion’s appeal.

“In this environment where central banks are more focused on the size of any rate hikes rather than whether to raise interest rates at all, it is hard for gold to find any significant support,” said Rupert Rowling, a market analyst at Kinesis Money.

(With files from Reuters)