Gold prices edge higher as pullback in U.S. dollar lifts appeal

Spot gold was up 0.2% at $1,781.14 per ounce

  
Gold bars are pictured on display at Korea Gold Exchange in Seoul, South Korea, August 6, 2020. Image used for illustrative purpose.

Gold bars are pictured on display at Korea Gold Exchange in Seoul, South Korea, August 6, 2020. Image used for illustrative purpose.

REUTERS/Kim Hong-Ji

Gold prices ticked up on Wednesday, lifted by a retreat in the dollar, although gains were kept in check after U.S. Treasury Secretary Janet Yellen said interest rates may need to rise.

Spot gold was up 0.2% at $1,781.14 per ounce by 0321 GMT. U.S. gold futures rose 0.3% to $1,784.60.

"A pullback in the dollar more broadly, after last night's strong selling has been supportive for gold prices," IG Market analyst Kyle Rodda said.

"There is going to be a reasonably strong resistance zone between $1,800 and $1,810, if prices happen to push through there, you might see some buyers on the other side of that."

The dollar index was down 0.1% against its rivals after scaling a near two-week peak in the previous session.

Gold prices fell more than 1% on Tuesday after Yellen said she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden's spending plans boost growth.

Higher interest rates dull gold's appeal as it increases the opportunity cost of holding non-yielding bullion.

Investor focus is expected to shift to April payrolls data due on Friday for further cues on the health of the U.S. economy.

So far, Federal Reserve Chair Jerome Powell has argued the labour market is still far short of where it needs to be to start discussing tapering asset buying.

Elsewhere, palladium rose 0.3% to $2,993.71 per ounce after hitting an all-time high of $3,017.18 in the previous session, driven by concerns of a shortage of the metal.

Supply shortage worries for the metal were worsened after top producer Nornickel announced disruptions at two Siberian mines due to waterlogging in March.

Silver edged 0.1% higher to $26.55, while platinum eased 0.1% to $1,236.43, moving further away its highest in more than two months touched on Tuesday. (Reporting by Shreyansi Singh in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

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