Gold muted as weaker dollar counters rate hike bets

Gold prices were flat on Tuesday, as a weaker dollar countered concerns about potential interest rate hikes, while investors waited for a slew of economic data to gauge the strength of global economies.

FUNDAMENTALS

* Spot gold was little changed at $1,797.94 per ounce by 0140 GMT. U.S. gold futures were up 0.2% at $1,799.10.

* The dollar index moved away from multi-month peaks, as investors consolidated gains after the currency hit a 1-1/2-year high on Friday on expectations of a faster pace of rate hikes by the U.S. Federal Reserve.

* Atlanta Fed President Raphael Bostic, a non-voter on the Federal Open Market Committee, told the Financial Times in an interview over the weekend that the Fed could super-size a rate increase to half a percentage point if inflation remained stubbornly high.

* Fed funds futures late Monday had priced in just under five hikes for 2022, or about 121 basis points of tightening. They also showed a 17% chance of a 50 basis-point increase in March IRPR, down from as high as 32% on Friday.

* Analysts at Goldman Sachs said on Friday they anticipated five rate hikes for this year, while analysts at Bank of America Merrill Lynch said they expected seven.

* Although gold is considered a hedge against inflation, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

* Spot silver was flat at $22.44 an ounce, platinum was up 0.1% at $1,019.23 and palladium fell 1.5% to $2,315.23.

DATA/EVENTS (GMT)

0330 Australia RBA Cash Rate Feb

0700 UK Nationwide house prices Jan

0745 France CPI Prelim YY Jan

0850 France Markit Manufacturing PMI Jan

0855 Germany Markit/BME Mfg PMI Jan

0855 Germany Unemployment Rate SA Jan

0900 EU Markit Mfg Final PMI Jan

0930 UK Markit/CIPS Mfg PMI Final Jan

1000 EU Unemployment Rate Dec

1445 US Markit Mfg PMI Final Jan