PRECIOUS-Gold subdued on dollar strength, focus on Fed minutes

BY Reuters | ECONOMIC | 08/16/22 05:36 AM EDT
       * Gold fell to one-week low of $1,772.30 on Monday
    * All eyes on U.S. Fed minutes due on Wednesday
    * Further Fed hawkishness likely to penalise gold - analyst

 (Updates comments, prices)
    By Arundhati Sarkar
    Aug 16 (Reuters) - Gold extended losses on Tuesday after
posting its biggest drop in a month in the previous session as a
stronger dollar dented bullion's appeal, while investors watched
for signs of further policy tightening by the U.S. Federal
Reserve.
    Spot gold        fell 0.2% to $1,776.22 per ounce by 1126
GMT, after falling more than 1% on Monday. U.S. gold futures
       dropped 0.4% to $1,790.60.
    The dollar, also considered a safe store of value along with
bullion, benefited from a disappointing set of economic data out
of China and a surprise rate cut by the country's central bank.

    A stronger dollar makes gold more expensive for overseas
buyers.
    "Amidst this uncertainty, investors are finding comfort in
the safety of the dollar, in a dynamic that penalises gold due
to the inverted price correlation between the two," said Ricardo
Evangelista, senior analyst at ActivTrades.
    If the FOMC minutes on Wednesday provide signs of further
hawkishness, it could enhance the appeal of the dollar and hurt
gold prices more, he added.
    Fed officials have maintained a hawkish tone and hinted at
more rate hikes this year to tame high inflation. Rising U.S.
interest rates tend to weigh on bullion, which yields no
interest.
    Investors have also pulled out of gold exchange-traded funds
and that could be weighing on gold too, Bank of China
International analyst Xiao Fu said.
    However, gold has been trading in a range and could be seen
consolidating in the current range for the next couple of weeks
due to ongoing geopolitical uncertainty and buying on dips by
some of the emerging market central banks, she added.
    Elsewhere, spot silver        fell 0.8% to $20.08 per ounce,
platinum        slipped 0.7% to $926.22 and palladium
dropped 1.2% to $2,120.48.

 (Reporting by Arundhati Sarkar in Bengaluru; Editing by Rashmi
Aich)

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