By Arundhati Sarkar
(Reuters) – Gold fell in range-bound trading on Wednesday as prospects of elevated interest rates continued to override its safe-haven appeal to some extent despite looming recession risks.
Spot gold fell 0.2% to $1,817.00 per ounce by 0920 GMT, holding a tight range between $1,814.30 – $1,822.76. U.S. gold futures were down 0.2% to $1,817.60.
“The increasingly hawkish rhetoric out of major central banks is exerting more downward pressure on zero-yielding gold, with the ebbs and flows in risk sentiment injecting further volatility in spot gold prices,” said Han Tan, chief market analyst at Exinity.
But bullion could still find some support from growing fears of a global downturn, Tan added.
U.S. Federal Reserve Chairman Jerome Powell is due to speak later in the day at an ECB forum, and traders will watch for policy cues following the Fed’s aggressive rate hike earlier this month.
“Overall, the outlook for interest rates means that when we do get a breakout of this trading zone we’ve been stuck in now for a couple of months, it’s more likely to be to the downside,” said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.
Analysts said gold has also been taking cues from dampened sentiment in wider commodities markets as well as soaring inflation takes a toll on the demand outlook.
Gold may eventually benefit from the economic worries, but “right now, the jury is still out,” said Saxo Bank analyst Ole Hansen.
Investor appetite across markets is pretty weak and from an investment perspective, it has been a bad year so far, and gold remains a “very tricky market to trade right now,” Hansen added.
European shares fell as fears about a global recession overshadowed recent optimism about China. [USD/] [MKTS/GLOB] [US/]
Spot silver was little changed at $20.84 per ounce, platinum rose 1.9% to $927.39 and palladium climbed 1.3% to $1,898.45.
(Reporting by Arundhati Sarkar and Bharat Govind Gautam in Bengaluru, Editing by Louise Heavens)
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