By Eileen Soreng
(Reuters) - Gold prices steadied after early losses on Tuesday as a pullback in the dollar provided some respite, but expectations the Federal Reserve will resort to aggressive policy tightening to tame inflation capped gains.
Spot gold rose 0.3% to $1,823.49 per ounce by 0932 GMT, after falling to its lowest since May 19 at $1,810.90 earlier in the session.
U.S. gold futures shed 0.4% to $1,825.30 per ounce.
The dollar index dipped 0.2% after scaling a near two-decade high on Monday, which sent greenback-priced bullion nearly 3% lower. U.S. benchmark 10-year yields were also off their multi-year high. [USD/] [US/]
Gold has been offered some room to breathe as the dollar retreats and yields slip, said FXTM analyst Lukman Otunuga.
"But sentiment towards gold remains bearish as investors price in the chance for a 75-basis point U.S. rate hike following last Friday's smoking hot inflation figures. Even if the precious metal pushes higher, this could be based on short-term factors and technicals," Otunuga added.
With the Fed's two-day policy meeting due to start later on Tuesday, markets are largely pricing in a 75-basis-point interest rate hike, which would be the biggest since 1994. [FEDWATCH]
While inflation and economic uncertainties are usually supportive for safe-haven gold, higher rates increase the opportunity cost of holding non-yielding bullion and boost the dollar.
Gold may end its bounce around resistance at $1,832 per ounce and resume its drop towards $1,808 thereafter, according to Reuters technical analyst Wang Tao. [TECH/C]
Spot silver rose 0.3% to $21.10 per ounce, platinum was 0.2% higher at $934.90. Palladium rose 0.5% to $1,806.53, having earlier hit a near six-month trough at $1,781.21.
"Palladium (and indeed platinum) are currently hit by the lack of demand from the automotive industry," Commerzbank said in a note.
(Reporting by Eileen Soreng in Bengaluru; Editing by Susan Fenton)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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