MTS Help Center

Gold prices edged up on Tuesday, underpinned by healthy demand, but an increasing probability of a U.S. interest rate hike and a firm U.S. dollar kept prices range-bound.

However, the underlying demand is strong for the metal, said ANZ analyst Daniel Hynes. “The broad backdrop for gold is still quite positive, with rising inflation expectations, quantitative easing in Europe and Japan, negative yields, sovereign bonds," Hynes said. "But certainly impetus for another round of kick higher is lacking at the moment," he added.

"The possibility of a December rate rise is gold bearish near term but if policy rates remain low for some time, the gold market should be well supported in the medium to longer term," said James Steel, an analyst at HSBC.

Gold is set to advance by as much as 15 percent before the end of next year as the Federal Reserve goes slow on increasing interest rates and the dollar remains subdued, buoying bullion demand, according to Templeton Emerging Markets Group. “The Fed is going to increase the rates by a little bit but not excessively and there is no guarantee that a rise in interest rates will put people off,” Executive Chairman Mark Mobius said in an interview at a Bloomberg

Demand for gold in India, the biggest consumer after China, has been falling, with a Bloomberg survey of five jewelers and traders expecting the weakest year since 2009. Still, a slump in prices over the past month has given jewelers a glimmer of hope that the coming festive season of Diwali, when buying gold is popular, can turn the trend around.

Money managers are getting the jitters on comments such as those from Federal Reserve Bank of New York President William Dudley, who said he sees tighter U.S. monetary policy by year-end. The rally that took gold prices to the best first half in almost four decades is fizzling as traders price in increasing odds that interest rates will rise, hurting the appeal of bullion as a store of value. The net-long position in gold futures and options held by hedge funds and other large speculators fell for a third straight week to the smallest in more than seven months, government data showed Friday.