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Highlights

  • Gold supported by a retreat in the dollar and US bond yields.
  • Investors anticipate slower rate hikes from the Federal Reserve at its policy meeting next week.
  • Spot gold was up 1.1% at $1,789.67 per ounce, as of 1850 GMT.
  • US gold futures settled 0.9% higher at $1,798.

Gold rose more than 1% on Wednesday, supported by a retreat in the dollar and US bond yields as investors anticipate slower rate hikes from the Federal Reserve at its policy meeting next week.

Spot gold was up 1.1% at $1,789.67 per ounce, as of 1850 GMT. U.S. gold futures settled 0.9% higher at $1,798.

"We're seeing rates along the curve here that have dropped ... and there's a little bit of U.S. dollar weakness ... we're just bouncing back from the lows," said Bart Melek, head of commodity markets strategy at TD Securities.

Making bullion less expensive for overseas buyers, the dollar dipped 0.5% against its rivals. Benchmark US 10-year Treasury yields dropped to a near three-month low.

Market participants widely expect a 50-basis point rate hike by the Fed at its final meeting of 2022 scheduled on Dec. 13-14.

Interest rate hikes to fight soaring inflation tend to raise the opportunity cost of holding gold, which yields no interest.

The November consumer price index (CPI) figures for the US, due next week, are also on the radar.

Still, bullion's outlook was made murky by recent strong US economic data, leading to fears that the Fed may lift interest rates more than recently projected.

"There's some doubt now that perhaps traders were too quick to conclude that the US central bank is going to pivot towards a more dovish stance and we're now in a bit of a holding pattern ahead of next Wednesday's FOMC," Melek said.

Spot silver rose 2.9% to $22.81 per ounce.

While silver is certainly exposed to an economic slowdown given its industrial appeal, it may be insulated from the worst of any downturn given its prominence in energy transition, Kinesis Money analyst Rupert Rowling said.

Platinum rose 1.8% to $1,006.33 per ounce, while palladium was 0.4% higher at $1,856.20.