Gold prices steadied on Monday after hitting a five-month high, as the dollar edged lower after more Chinese cities relaxed COVID-19 restrictions over the weekend. Spot gold was little changed at $1,799.26 per ounce by 0717 GMT, after touching its highest level since July 5 at $1,809.91. U.S. gold futures ticked 0.1% higher to $1,812.10.
Also Read | Russia will not sell oil subject to Western cap: Putin’s aide
The dollar index held close to a more than five-month low, making greenback-priced bullion less expensive for overseas buyers. U.S. labour market shrugged off recession fears with data released on Friday showing U.S. employers hired more workers than expected in November and increased wages.
“The market still expects the Fed (Federal Reserve) to slow their pace of tightening, which is providing support to gold,” said City Index analyst Matt Simpson.
Also Read | Markets open in red as Sensex plunges over 100 points at 62,807; Nifty at 18,658
Market participants see a 91% chance of a 50-basis-point rate hike at the Fed’s meeting this month.
Lower interest rates tend to be beneficial for gold as they reduce the opportunity cost of holding the non-yielding asset.
“Also, news that China is scaling back its COVID restrictions means that gold demand will increase in the region, further supporting prices,” said Simpson.
More cities in top gold consumer China announced an easing of coronavirus curbs on Sunday, as the country tries to make its zero-COVID policy more targeted and less onerous after unprecedented protests.
The London Bullion Market Association is creating a database of Russian gold bars held by banks in London to prevent Russian companies and the Russian central bank evade sanctions, the industry group said on Friday.
Spot silver edged up 0.1% at $23.14 per ounce, platinum added 0.2% to $1,016.01, and palladium gained 0.8% to $1,914.02.