PRECIOUS-Gold rebounds 1% as tepid dollar offsets rate-hike fears

BY Reuters | ECONOMIC | 11/29/22 06:36 AM EST

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Market focus on Fed Chair Powell's speech on Wednesday

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Still expect further Fed rate hikes to weigh on gold - analyst

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Silver rises more than 1%

By Arundhati Sarkar

Nov 29 (Reuters) - Gold prices climbed as much as 1% on Tuesday as a pullback in the dollar outweighed pressure from hawkish remarks by U.S. Federal Reserve officials on interest rate hikes.

Spot gold was up 0.8% at $1,753.91 per ounce, as of 1112 GMT, while U.S. gold futures gained 0.9% to $1,754.90.

Gold prices posted their worst day in a month on Monday, shedding nearly 1%, following hawkish comments from Fed officials James Bullard and John Williams.

The dollar index fell 0.4% against its rivals on Tuesday, making gold less expensive for other currency holders.

While the slightly weaker dollar is supporting gold at the moment, we still expect that further Fed rate hikes will weigh on gold prices over the coming weeks, UBS analyst Giovanni Staunovo said.

The Fed Chair Jerome Powell's speech at a Brookings Institution event on Wednesday is now of interest to traders seeking more clarity on the central bank's policy stance.

"The market will closely focus on any indication of ending interest rate hike. If Powell would indicate we are close to it, gold would benefit, on the other hand, if he indicates further rate hikes are needed, my guess, that would weigh on gold," Staunovo added.

The ADP National Employment report and the U.S. Labor Department's non-farm payroll data due this week also remains on the radar.

Meanwhile, Chinese police were out in force in Beijing and Shanghai to prevent more protests against COVID-19 curbs.

Protests in China, the biggest consumer of gold in the world, and the resulting heavy security presence will impact spending and industrial activity over the following month, which will weigh on all metals, said Michael Langford, director at corporate advisory firm AirGuide.

Spot silver rose 1.7% to $21.28, platinum gained 0.8% to $996.75, and palladium added 0.8% to $1,858.84. (Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips and Eileen Soreng)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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