(Reuters) - Gold prices rose above $1,500 an ounce on Tuesday, following the previous session’s steep fall, as focus shifted to U.S. Federal Reserve policy statements and growth concerns.
Spot gold was up 0.8% to $1,506.65 per ounce by 1112 GMT, after falling to a near one-week low of $1,492.10 on Monday.
U.S. gold futures gained 0.3% to $1,515.80 an ounce. “This is a rebound after prices dropped for the last few days because the sentiment was improving in the financial markets and short-term traders took some profits after the (recent) rally,” Julius Baer analyst Carsten Menke said.
“However, fundamental backdrop for gold remains very supportive,” he added, citing the ongoing trade dispute between the United States and China and a potential interest rate cut from the Fed.
Equity markets around the world gained as hopes for stimulus in major economies tempered fears of a global recession. The shift in sentiment towards riskier assets contributed to a more than 1.2% drop in gold prices on Monday, its biggest daily percentage decline in a month. But prices have risen nearly 17% this year and more than $80 so far this month.
The Fed’s minutes from its July policy meeting are due on Wednesday, with investors also keeping a close eye on the central bank’s Jackson Hole seminar and this weekend’s Group of Seven summit.
“While the improving market mood has the potential to send the precious metal lower in the near term, the medium to longer term outlook remains bullish,” FXTM analyst Lukman Otunuga said in a note.
Traders see about an 83.8% chance of a 25 basis-point interest rate cut by the Fed in September. Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
The dollar index hit a more than three-week high on Tuesday, boosted by slightly higher Treasury yields.
On the technical front, spot gold may test a support at $1,483 per ounce, a break below which could cause a fall to $1,467, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver rose above the key $17 mark, gaining nearly 1% to $17.03 per ounce. Palladium climbed 0.7% to $1,483.75 after hitting a more than three week high of $1,487.18 earlier in the session. Platinum gained 0.3% to $852.28.
Reporting by Brijesh Patel in Bengaluru.; Editing by Mike Harrison and Jane Merriman