PRECIOUS-Gold rises on dollar pullback, hopes of slower rate hikes

BY Reuters | ECONOMIC | 11/29/22 10:47 AM EST

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Market focus on Fed Chair Powell's speech on Wednesday

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Markets expect 50 bps rate hike from Fed in December

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Silver rises 2%

(Recasts, adds comments, updates prices)

By Seher Dareen

Nov 29 (Reuters) - Gold prices rose 1% on Tuesday, helped by a retreat in the dollar and hopes around less aggressive rate hikes from the U.S. Federal Reserve going forward.

Spot gold gained 0.8% to $1,755.29 per ounce by 10:17 a.m. ET (1517 GMT). U.S. gold futures rose 0.7% to $1,751.60.

The dollar was down 0.2% against its rivals, making gold less expensive for other currency holders.

With the bulk of rate hikes from the Fed being priced in, investors are now seeing light at the end of the tunnel in terms of an end to the hikes, said David Meger, director of metals trading at High Ridge Future.

The U.S. central bank delivered a fourth consecutive 75-basis-point rate hike earlier this month to tame soaring inflation.

However, traders are now pricing in a 50-basis-point increase at the Fed's December meeting after minutes of the last policy meeting signalled a slower pace of hikes.

Investor focus will be on Fed Chair Jerome Powell's speech at a Brookings Institution event on Wednesday that could offer more clarity on the central bank's policy stance.

Gold is sensitive to rising interest rates as they increase the opportunity cost of holding the non-yielding asset.

"A potential recovery in the dollar and still-rising interest rates around the world means investors might shy away from low- and zero-yielding assets like gold," Fawad Razaqzada, market analyst at City Index, said in a note.

Traders also kept a close tab on unrest in top bullion consumer China as police were out in force in Beijing and Shanghai to prevent more protests against COVID-19 curbs.

Elsewhere, spot silver rose 2.1% to $21.36 per ounce, platinum gained 1.4% to $1,002.24 and palladium was up 1.1% at $1,864.01. (Reporting by Seher Dareen and Brijesh Patel in Bengaluru; Editing by Shailesh Kuber)

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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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