Gold edges lower, fall capped by weaker dollar and recession fears

By Ashitha Shivaprasad

(Reuters) - Gold prices edged lower on Monday as higher rates weighed on bullion, while investors watched for any cues on policy moves at the European Central Bank's forum in Portugal.

Spot gold fell 0.1% to $1,823.89 per ounce by 2:47 p.m. ET (1847 GMT). U.S. gold futures settled down 0.3% at $1,824.8.

"Gold softened as the bond market selloff resumed after weak demand from another Treasury auction," Edward Moya, senior analyst with OANDA, said.

"In the short term, gold's outlook is mixed as there is great uncertainty this summer, with chances of a more aggressive Federal Reserve on one side and recession risks on the other."

The dollar also fell and a rise in U.S. 10-Year Treasury yields made gold less attractive. [US/]

Gold is considered a hedge against inflation spikes and economic risks, yet higher interest rates raise the opportunity cost of holding the non-yielding asset. [US/]

Investors are watching for any signs of future policy moves as central bank heads, including ECB President Christine Lagarde and Fed Chair Jerome Powell, attend the annual forum in Sintra.

Meanwhile, analysts said a plan by Britain, the United States, Japan and Canada to ban imports of Russian gold to tighten sanctions on Moscow may only have a limited fundamental impact.

"Not much gold is being exported to the G-7 nations, primarily because of the lack of flights from Russia since the war started. The impact on gold price has thus far been negligible," Stephen Innes, managing partner at SPI Asset Management, said.

Russia, the world's third-largest gold producer, accounts for about 10% of global production.

Spot silver rose 0.1% to $21.13 per ounce, platinum was also up 0.1% to $908.00, while palladium fell 0.3% to $1,870.52.

(Reporting by Ashitha Shivaprasad and Seher Dareen in Bengaluru; Editing by Aditya Soni and Shounak Dasgupta)