Rate hike bets subdue gold even as slowdown fears mount

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Gold fell in range-bound trading on

Wednesday as prospects of elevated interest rates continued to

override its safe-haven appeal to some extent despite looming

recession risks.

Spot gold fell 0.2% to $1,817.00 per ounce by 0920

GMT, holding a tight range between $1,814.30 – $1,822.76. U.S.

gold futures were down 0.2% to $1,817.60.

“The increasingly hawkish rhetoric out of major central

banks is exerting more downward pressure on zero-yielding gold,

with the ebbs and flows in risk sentiment injecting further

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volatility in spot gold prices,” said Han Tan, chief market

analyst at Exinity.

But bullion could still find some support from growing fears

of a global downturn, Tan added.

U.S. Federal Reserve Chairman Jerome Powell is due to speak

later in the day at an ECB forum, and traders will watch for

policy cues following the Fed’s aggressive rate hike earlier

this month.

“Overall, the outlook for interest rates means that when we

do get a breakout of this trading zone we’ve been stuck in now

for a couple of months, it’s more likely to be to the downside,”

said Michael McCarthy, chief strategy officer at Tiger Brokers,

Australia.

Analysts said gold has also been taking cues from dampened

sentiment in wider commodities markets as well as soaring

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inflation takes a toll on the demand outlook.

Gold may eventually benefit from the economic worries, but

“right now, the jury is still out,” said Saxo Bank analyst Ole

Hansen.

Investor appetite across markets is pretty weak and from an

investment perspective, it has been a bad year so far, and gold

remains a “very tricky market to trade right now,” Hansen added.

European shares fell as fears about a global recession

overshadowed recent optimism about China.

Spot silver was little changed at $20.84 per ounce,

platinum rose 1.9% to $927.39 and palladium

climbed 1.3% to $1,898.45.

(Reporting by Arundhati Sarkar and Bharat Govind Gautam in

Bengaluru, Editing by Louise Heavens)