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PRECIOUS-Gold prices ease as Fed rate hike signal dents appeal
Published at 23/09/2021 at 08:09

* Spot gold may revisit Sept. 20 low of $1,741.86/oz - technicals

* Dollar eases off one-month peak

(Adds comments, updates prices)

By Eileen Soreng

Sept 23 (Reuters) - Gold prices fell on Thursday as an interest rate hike signal from the U.S. Federal Reserve dented the appeal of the non-yielding bullion, although a retreat in the dollar limited the metal's decline.

Spot gold was down about 0.3% at $1,763.50 per ounce by 0644 GMT, while U.S. gold futures slipped 0.8% to $1,764.20.

New projections from the Fed's policy meeting showed half of the officials were ready to raise interest rates next year in response to heating inflation.

"Everyone is going to be focused on how persistent these inflation pressures are and whether the Fed needs to be hastier in hiking the Fed funds rate in response... Once we start talking about rate hikes that's going to be really bad for gold prices," IG Market analyst Kyle Rodda said.

Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

Fed Chairman Jerome Powell said the central bank could begin withdrawing its asset purchases after its November policy meeting as long as U.S. job growth through September is "reasonably strong."

Providing some respite to gold, the dollar eased 0.2% after hitting a one-month high earlier in the session.

Gold could find support at these levels with developments around China Evergrande and an upcoming debt ceiling debate in the United States potentially causing some market volatility, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

On the technicals front, spot gold may revisit its Sept. 20 low of $1,741.86, as the drop on Wednesday confirmed completion of the bounce from this level, according to Reuters technical analyst Wang Tao.

Silver fell 0.4% to $22.59 per ounce. Palladium

rose 0.5% to $2,033.68, while platinum edged 0.3% higher to $999.77.

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(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

((eileen.soreng@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuters.net))