* Dollar index dips 0.1% against its rivals
* Australia’s cenbank to taper bond buying
* Gold’s upside potential might be limited - analyst (Recasts, adds details, and updates prices)
July 6 (Reuters) - Gold rose above the $1,800/ounce psychological level on Tuesday to hit a three-week high, as a pullback in the dollar lifted bullion demand, while investors awaited minutes from the U.S. Federal Reserve’s June meeting for clarity on monetary policy.
Spot gold climbed 0.5% to $1,800.23 per ounce by 0502 GMT, touching its highest level since June 17.
U.S. gold futures jumped 0.9% to $1,800.10 per ounce.
“It’s mainly a weakening U.S. dollar that is boosting gold prices. Gold was sold down heavily after the June FOMC meeting and now that expectations have been priced in, buyers are back to the market,” said Margaret Yang, a strategist at DailyFX.
“However, gold’s upside potential might be limited against the backdrop of global hawkish turn in monetary policies. Don’t think prices will recover back to the early June levels anytime soon.”
The dollar weakened 0.1%, moving further away from a three-month high hit last week.
Focus this week is on minutes from the Fed’s latest meeting due out on Wednesday, after a hawkish tilt from the U.S. central bank last month in which policymakers projected a start to rate hikes in 2023, sending gold prices below the $1,800 level.
Higher interest rates increase the opportunity cost of holding bullion, which pays no interest.
“Gold prices may be able to hold onto recent gains but staying above the $1,800 resistance may not be in the traders’ radar until the latest minutes of the Fed’s meeting is released,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
Australia’s central bank left its cash rate at a record low of 0.1% and said it was likely to remain there until 2024, though it did pare back its bond-buying campaign.
Elsewhere, silver rose 0.4% to $26.55 per ounce, palladium gained 0.2% to $2,818.22, and platinum climbed 0.8% to $1,105.88.
(Reporting by Brijesh Patel in Bengaluru, Editing by Sherry Jacob-Phillips and Subhranshu Sahu)
Source: Reuters