Gold rises on bargain hunting after hitting weakest level since December

Gold prices are showing rising trends after dropping severely in previous months. This is owed to recession fears and rising oil prices, leading investors into frenzy

By Arundhati Sarkar

(Reuters) - Gold prices staged a slight recovery on Wednesday as some investors resorted to bargain hunting after a more than 2% fall in the previous session, while focus was also on minutes of the U.S. Federal Reserve's last monetary policy meeting.

Spot gold rose 0.2% to $1,768.19 per ounce by 0836 GMT, after it dipped to $1,762.45, its lowest since mid-December. U.S. gold futures were up 0.3% to $1,768.50.

The dollar index held near its highest level since 2002.

Gold prices are seeing a "correction from over sold conditions," StoneX analyst Rhona O'Connell said, adding, there are signs of bargain hunting below $1,800, but it may struggle to recover in the near term unless momentum has dissipated from the dollar.

Bullion has faced the heat of rising global interest rates and Treasury yield, which increase the opportunity cost of holding the non-yielding bullion, while boosting the dollar. [USD/] [US/]

A stronger dollar makes greenback priced bullion less attractive among overseas buyers. [USD/]

Investors now await the 2 p.m. ET (1800 GMT) release of the minutes from the U.S. central bank's June 14-15 meeting and U.S. payroll data on Friday for signs on the health of the economy.

While hawkish FOMC views are already baked into the markets, the jobs data and its sub-components would be interesting to look out for, O'Connell added.

More major central banks raised rates in June than in any month for at least two decades, Reuters calculations showed, and with inflation at multi-decade highs, policy-tightening is unlikely to let up this year.

Meanwhile, top gold consumer China witnessed nascent COVID-19 flare-ups across the country. [MKTS/GLOB]

After dropping through support around $1,790-$1,800 on Tuesday, gold could head lower in the medium term, said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

Spot platinum fell 0.2% to $863.68 per ounce, while palladium rose 0.3% to $1,938.86.

Silver gained 0.5% to $19.28.

 

(Reporting by Arundhati Sarkar and Bharat Govind Gautam in Bengaluru, Editing by Louise Heavens)