PRECIOUS-Gold rises 1% as smaller U.S. rate-hike bets pressure dollar

BY Reuters | ECONOMIC | 12/01/22 05:48 AM EST

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Focus on non-farm payrolls data due on Friday

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Traders see 91% chance of 50 bps rate hike in December

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Next resistance for gold at $1,788-$1,808 - analyst

(Updates prices, adds details)

By Arundhati Sarkar

Dec 1 (Reuters) - Gold prices extended gains for a third straight session on Thursday, as the dollar slipped after Federal Reserve Chair Jerome Powell said the U.S. central bank might scale back the pace of its interest rate hikes as soon as December.

Spot gold gained 8.3% in November, ending its seven-month losing streak, as investors cheered Powell's comments at the Brookings Institution.

Lower rates tend to boost the appeal of non-yielding gold.

But Powell also cautioned that the fight against inflation was far from over.

Spot gold rose around 1% to $1,785.60 per ounce by 1305 GMT. U.S. gold futures climbed 2.2% to $1,797.80.

Rival safe-haven dollar fell 0.5% on the day, making gold less expensive for overseas buyers.

"The band between $1,788 and $1,808 is a significant area of resistance and a break above would signal a further recovery in gold prices," said Ole Hansen, head of commodity strategy at Saxo Bank, adding gold could see some profit-taking as it approaches that level.

Market participants now see a 91% chance of a 50-basis-point hike at the U.S. central bank's upcoming December meeting.

Traders also took stock of news that top bullion consumer China could announce an easing of its COVID-19 quarantine protocols in the coming days.

But Julius Baer analyst Carsten Menke said the rally post Powell's was "outsized," considering that the markets had already moved up on expectations of a slowdown of rate hikes earlier this month.

"We still see short-covering in the futures market as the dominant driver of these moves while investors are still staying on the sidelines," Menke added.

Investors' attention now turns to the U.S. Labor Department's non-farm payrolls (NFP) data due on Friday.

If the NFP numbers confirm the weakness seen in yesterday's data, then the "market would most certainly have the excuse that it has waited to move higher," Hansen added.

Spot silver rose 0.2% to $22.24 per ounce, while platinum fell 0.3% to $1,030.04.

Palladium added 0.5% to $1,891.20. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips)

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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