Gold resumes gains after marking heftiest loss in 3 months

Gold prices rose in European trade after a two-day hiatus, and after marking the heftiest daily loss in three months on active profit-taking while dollar strengthened following strong US services data. 

However most analysts still expect the Fed to increase interest rates by 50 basis points only next week, which will underpin gold. 

Gold Prices Today

Gold prices rose over 0.4% to $1,776 an ounce, after losing 1.6% yesterday, the second loss in a row, and the largest since September on profit-taking away from five-month highs at $1,810. 

US Services 

Recent US data showed US services PMI rose unexpectedly last month, showing the services sector remains vibrant.

US Services PMI rose to 56.5 from 54.4 in the previous reading, easily beating estimates of 53.5. 

Such data raised chances of a 0.75% rate hike by the Federal Reserve from 18% to 22% next week.

Fed's Meeting

The Federal Reserve is meeting next week to study economic developments and decide on policies, with the Fed expected to hike rates for the seventh meeting in a row. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 2.03 tones on Friday, the third decline in a row to a total of 903.46 tones, the lowest since January 2020.