Gold Hits One-week Peak As US Dollar Backs Off Recent Highs

Gold prices climbed for a second straight session to hit a one-week peak on Tuesday as the US dollar pulled back from recent highs, while investors awaited comments from Federal Reserve officials for clarity on interest rate cut policy.

Spot gold rose 0.3 per cent to USD 2,619.50 per ounce by 0829 GMT, the highest since 12 November. Prices gained 2 per cent on Monday, recovering from a two-month low hit on Thursday. US gold futures added 0.4 per cent to USD 2,623.70.

"The selling has run out of steam and that's attracting those potential buyers sitting on the fence waiting for the market to stabilise to get back in," said Ole Hansen, head of commodity strategy at Saxo Bank.

"The dollar has stopped rising and that probably was the necessary trigger."

The US dollar experienced a pullback as investors engaged in profit-taking following last week's stellar rally that saw it scale a one-year high. The decline in the dollar's value makes gold less expensive for buyers holding other currencies.

Multiple Fed officials are scheduled to speak this week, which could offer further insights into the rate cut paths.

Traders currently see a 58.9 per cent chance of a 25-basis-point cut in December versus 41.1 per cent odds of holding the rates steady.

Also helping gold was an escalation of attacks in the Russia-Ukraine war. Russia launched its largest air strike on Ukraine in nearly three months on Sunday.

Gold, which doesn't pay any interest, performs well in times of geopolitical uncertainty and low-interest rate environments.

Among other metals, spot silver added 0.2 per cent to USD 31.22, hitting a one-week high earlier in the session. Platinum ticked 0.3 per cent lower to USD 964.97.

Palladium was steady at USD 1,004.30 after rising more than 5 per cent on Monday.

"The long-term outlook for palladium remains negative, in our view, as the metal is projected to be over-supplied due to declining demand from the autocatalyst sector," UBS analysts said in a note.