Nov 24 (Reuters) – Gold prices edged higher on Wednesday, though strength in the U.S. dollar and bets that the Federal Reserve could raise interest rates sooner kept the metal below the key $1,800 mark.
Spot gold rose 0.2% to $1,792.68 per ounce by 0438 GMT, after slipping 0.9% to its lowest since Nov. 5 on Tuesday. U.S. gold futures added 0.5% to $1,792.90.
The metal has slumped 4.9% from last week’s five-month high on expectations that newly renominated Fed Chairman Jerome Powell could accelerate the pace at which the central bank normalises monetary policy amid surging consumer prices.
Those bets also helped strengthen the dollar index which steadied near its highest in 16 months on Wednesday, heaping pressure on bullion as it raises the metal’s cost to buyers holding other currencies.
“Although most of last week’s fast-money long positions are probably now closed out, gold is unlikely to stage a meaningful recovery above $1,800 unless U.S. 30-year yields unwinds this week’s gains,” Jeffrey Halley, senior market analyst at OANDA, said.
Halley expects any rally in gold to be capped at $1,810 in the near-term, with the narrative around higher inflation and interest rate rises propping up bond yields for the time being.
U.S. 30-year Treasury yields were not far from their highest level since late-Oct hit earlier this month.
Investors also took stock of data on Tuesday that showed British businesses reported strong growth in new orders this month alongside record cost pressures, boosting the chances for a Bank of England rate rise in December.
