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PRECIOUS-Gold steadies as dollar dip offsets pressure from hawkish Fed

(Recasts and updates prices)

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Dollar eases off recent peak

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Fed raises rates by 75 bps to 3-3.25% range

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Bank of England raises rates to 2.25%

Sept 22 (Reuters) - Gold prices steadied on Thursday, as a pullback in the dollar helped bullion to counter pressure from elevated U.S. bond yields and hawkish remarks on future rate hikes from the Federal Reserve.

Spot gold was flat at $1,673.19 per ounce by 1211 GMT, after dropping as much as 1% in the Asia session.

U.S. gold futures edged 0.3% higher to $1,681.50.

“Rising U.S. yields continue to pressure gold prices. Unless yields suddenly start to come down and the dollar starts to weaken, we’re probably not going to see significantly higher gold prices,” said Michael Hewson, chief markets analyst at CMC Markets.

“The Fed started hiking rates from March and gold has basically been trending down since then, and if the Fed continues to hike, then gold will continue to fall.”

The Fed hiked interest rates by 75 basis points on Wednesday for a third consecutive time and signaled more increases are to come to tame soaring inflation. The Bank of England raised its key interest rate to 2.25% from 1.75%.

Rising rates dull bullion’s appeal since it yields no interest. Gold prices have fallen nearly 20% since scaling above the key $2,000 per ounce mark in March.

Benchmark 10-year U.S. Treasury yields were hovering close to their highest level since 2011, increasing the opportunity cost of holding bullion.

Offering some respite to gold, the dollar fell 0.7% after hitting a two-decade high against its rivals, making the greenback-priced metal less expensive for buyers holding other currencies.

“The rapid pace of hikes is certainly going to weigh on gold prices, but eventually the concerns about growth and recession will come to the fore and lead to renewed buying interest in gold at lower levels,” said Sugandha Sachdeva, vice president of commodity and currency research at Religare Broking.

Spot silver rose 0.2% to $19.62 per ounce, platinum gained 0.3% to $910.55 and palladium eased 0.2% to $2,151.65. (Reporting by Brijesh Patel in Bengaluru; Editing by Krishna Chandra Eluri)

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