Gold prices slipped on Tuesday as rising oil prices heightened inflation concerns and strengthened expectations for elevated interest rates, although RHB Research maintained a bullish trading view as long as the precious metal holds above US$4,300.
Spot gold was down 0.2% at US$4,287.69 an ounce as of 7:13am GMT, while US gold futures fell 0.5% to US$4,328.10.
The decline came ahead of the US Federal Reserve’s policy decision on Wednesday, with markets widely expecting a 25 basis point rate hike that would take the benchmark rate to 3.75% to 4.00%.
Higher oil prices have added to inflation concerns after Yemen’s Iran-aligned Houthis launched fresh attacks on Saudi Arabia, raising fears over further supply disruptions. Benchmark 10-year US Treasury yields also climbed to their highest level since 2007.
Gold typically comes under pressure when interest rates rise as higher yields increase the opportunity cost of holding non-yielding bullion.
RHB Research, however, said the major support level at US$4,300 remained intact after COMEX gold fell US$56.80 on Monday to close at US$4,318.
The commodity opened at US$4,345.90, climbed to an intraday high of US$4,367.90 before falling to a low of US$4,259.50 and recovering to close at US$4,318.
RHB said the bulls would retain the technical upper hand as long as gold remains above US$4,300, with a break above the level potentially opening the way towards the US$4,500 resistance.
The research house maintained its long position initiated at US$4,273.30, with a stop-loss at US$4,300.
It identified US$4,300 as the first support level, followed by US$4,150, while resistance was seen at US$4,500 and then US$4,700.
RHB said it would retain its bullish trading bias unless gold breaches the US$4,300 stop-loss level.
Meanwhile, IG market analyst Tony Sycamore said the Fed’s guidance would be more important for gold than the expected rate hike itself.
“If he casts it as the start of a meeting-by-meeting tightening cycle, that would be a hit to gold and to risk assets overall,” he said, referring to Fed Chair Kevin Warsh.
“If instead he signals a preference for a more measured pace, that would prove somewhat supportive for risk sentiment and for gold.”
Elsewhere in precious metals, spot silver fell 0.4% to US$62.98 an ounce, while platinum gained 0.1% to US$1,761.12 and palladium declined 0.8% to US$1,282.79.
