REUTERS

Gold slipped from a near two-week high on Monday as the dollar strengthened, although rising bets of interest rate cuts by the US Federal Reserve following Chair Jerome Powell’s dovish pivot last week, lent some support to bullion.

Spot gold inched down 0.1 percent at $3,367.86 per ounce, as of 0632 GMT, after hitting its highest since August 11 on Friday.

US gold futures for December delivery eased 0.2 percent to $3,412.50.

The dollar index rose 0.1 percent against its rivals after dropping to a four-week low, making gold less attractive to overseas buyers.

“There’s a decent level of support for gold around $3,350 over the near term, with Powell’s dovish hints allowing gold to carve out a prominent swing low on Friday,” City Index senior analyst Matt Simpson said.

“A sustained rally likely requires softer PCE inflation and weaker employment data going forward. But with inflation likely to remain elevated, gold’s gains could remain capped beyond the expected initial bounce.”

Powell on Friday signalled a possible rate cut at the Fed’s meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn’t set in stone.

Markets are now pricing in an 87 percent chance of a quarter-point rate cut in the September policy meeting, and a cumulative reduction of 48 basis points by this year-end, according to CME FedWatch Tool.

Gold tends to appreciate in a low-interest-rate environment, which reduces the opportunity cost of holding non-yielding bullion.