Gold firms on softer dollar, jitters over projectile strike off Oman cost

By Arundhati Sarkar

(Reuters) – Gold rose on Wednesday as the dollar eased, while reports of a tanker being hit by a projectile off the coast of Oman also boosted the safe-haven metal’s appeal.

Spot gold rose 0.3% to $1,783.59 per ounce by 1008 GMT, while U.S. gold futures gained 0.6% to $1,786.90.

The U.S. Navy’s Fifth Fleet said it was aware of an incident in the Gulf of Oman involving a commercial vessel.

Gold rose as the news broke, but more clarity on the incident would be needed for further impact, Saxo Bank analyst Ole Hansen said.

“It is an underlying support in the market, but it’s not the one providing a lot of strength,” Hansen said, adding gold needs either a weaker dollar or lower yields to advance further.

The dollar slipped 0.4%, making gold cheaper for overseas buyers. [USD/]

Bullion hit its highest on Tuesday since Aug. 15 following reports of Russian missile killing two people in Poland. It gave up some gains after U.S. President Joe Biden said the weapon may not have been fired from Russia.

“Gold is still largely pinned on the Fed … We can see gold is kind of continuing to creep higher since last week’s spike, but hasn’t really found tremendous follow-through,” said DailyFX currency strategist Ilya Spivak.

Data on Tuesday showed U.S. producer prices increased less than expected in October, lifting hopes that the U.S. Federal Reserve could slow rate hikes going forward.

While gold is considered a safe investment during times of political and financial uncertainty, rising interest rates dim the non-yielding bullion’s appeal.

Elsewhere, spot silver rose 2.1% to $21.9909 per ounce, platinum added 0.6% to $1,020.79, while palladium was little changed at $2,097.21.

(Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru; Editing by Vinay Dwivedi)

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