Gold gains on lower dollar, more rate hikes expected

Gold prices rose today, Thursday, with the decline of the dollar and US Treasury bond yields, while dealers await new indications of the Federal Reserve’s (US Central Bank) plans to raise interest rates.

According to Reuters, gold rose in spot transactions by 0.2 percent, to $1,807.57 an ounce, at 0303 GMT, after falling one percent in the previous session. US gold futures fell 0.1 percent, to $1,814.30.

The dollar index fell 0.2 percent. A weaker dollar makes bullion more attractive to buyers who hold other currencies. And the benchmark US Treasury bond yields for ten years fell, after reaching a six-week high in the previous session.

Traders will study the weekly jobless claims numbers in the United States, which are released at 1330 GMT, to see its potential impact on the Federal Reserve’s strategy to raise interest rates.

Bullion is on track for an annual decline of about 1 percent, pressured by sharp increases in US interest rates. However, prices rose nearly $200 from a more than two-year low hit in September on hopes that the US central bank will slow the pace of interest rate increases.

The bank slowed that pace to 50 basis points in December after four consecutive increases of 75 basis points each, while US central bank chief Jerome Powell stressed the need to keep interest rates high for some time to combat inflation.

High interest rates weaken the attractiveness of gold as a hedge against inflation and increase the opportunity cost of owning the yellow metal because it does not yield a return.

In terms of other precious metals, the price of silver in spot transactions rose 0.2 percent to $23.57, platinum rose 0.3 percent to $1010.67, and palladium increased 0.2 percent to $1786.97.