<p>Gold extended gains on Tuesday to firm above the key $1,700 per ounce level on a retreat in the dollar and US Treasury yields as investors expected the Federal Reserve to tone down its pace of monetary tightening.</p>.<p>Spot gold was up 0.4 per cent at $1,705.40 per ounce, as of 0918 GMT, having touched its highest since Sept. 13 at $1,710.49 earlier in the session.</p>.<p>US gold futures rose 0.8 per cent to $1,714.90.</p>.<p>"Bad news is good news for gold now. Basically, if we get worse economic data from the US, then the market will believe we're closer to a peak in rates," said Ole Hansen, head of commodity strategy at Saxo Bank.</p>.<p>"Gold is not out of the woods yet, but at least we've seen a very strong rebound. The first move has been driven by short covering."</p>.<p>Gold started the quarter on a solid note, registering on Monday its biggest daily percentage gain since March as a slowdown in US manufacturing activity raised hopes that the Fed might be less aggressive going forward.</p>.<p>US 10-year Treasury yields fell to a near two-week low, while the dollar index extended its decline, making gold cheaper for other currency holders.</p>.<p>"Investors have started to price in a less aggressive Fed, with the revised expectations reflected by greater demand for treasuries, lower yields, and the corresponding weakening of the greenback," Ricardo Evangelista, senior analyst at ActivTrades, said in a note.</p>.<p>The Fed has raised rates aggressively since March and Fed officials have noted more rate hikes are needed to tame inflation.</p>.<p>Focus now shifts to US non-farm payrolls data due on Friday that could offer more clarity on Fed policy tightening.</p>.<p>Spot silver rose 0.2 per cent to $20.79 per ounce, having earlier hit a peak since June 29.</p>.<p>Platinum was steady at $902.67 per ounce and palladium climbed 1.4 per cent to $2,251.35. </p>
<p>Gold extended gains on Tuesday to firm above the key $1,700 per ounce level on a retreat in the dollar and US Treasury yields as investors expected the Federal Reserve to tone down its pace of monetary tightening.</p>.<p>Spot gold was up 0.4 per cent at $1,705.40 per ounce, as of 0918 GMT, having touched its highest since Sept. 13 at $1,710.49 earlier in the session.</p>.<p>US gold futures rose 0.8 per cent to $1,714.90.</p>.<p>"Bad news is good news for gold now. Basically, if we get worse economic data from the US, then the market will believe we're closer to a peak in rates," said Ole Hansen, head of commodity strategy at Saxo Bank.</p>.<p>"Gold is not out of the woods yet, but at least we've seen a very strong rebound. The first move has been driven by short covering."</p>.<p>Gold started the quarter on a solid note, registering on Monday its biggest daily percentage gain since March as a slowdown in US manufacturing activity raised hopes that the Fed might be less aggressive going forward.</p>.<p>US 10-year Treasury yields fell to a near two-week low, while the dollar index extended its decline, making gold cheaper for other currency holders.</p>.<p>"Investors have started to price in a less aggressive Fed, with the revised expectations reflected by greater demand for treasuries, lower yields, and the corresponding weakening of the greenback," Ricardo Evangelista, senior analyst at ActivTrades, said in a note.</p>.<p>The Fed has raised rates aggressively since March and Fed officials have noted more rate hikes are needed to tame inflation.</p>.<p>Focus now shifts to US non-farm payrolls data due on Friday that could offer more clarity on Fed policy tightening.</p>.<p>Spot silver rose 0.2 per cent to $20.79 per ounce, having earlier hit a peak since June 29.</p>.<p>Platinum was steady at $902.67 per ounce and palladium climbed 1.4 per cent to $2,251.35. </p>