Gold prices eased on Tuesday, as a firmer dollar made bullion expensive for holders of other currencies while concerns that the U.S. Federal Reserve will tighten its monetary policy sooner than expected also dented the metal’s appeal.

Gold is seen as a hedge against inflation, though a rate hike by the Fed will increase the opportunity cost of holding bullion and dull its appeal.

Spot gold was down 0.2% at $1,775.42 per ounce, as of 0100 GMT. U.S. gold futures fell 0.2% to $1,776.40.

The dollar index strengthened 0.1% against rivals.

The Fed has made “substantial further progress” towards its inflation goal in order to begin tapering asset purchases, Fed Bank of Richmond President Thomas Barkin said on Monday.

The supply chain imbalances and higher demand currently leading to higher inflation are transitory and the Fed has the tools to respond if inflation remains elevated for longer than anticipated, Fed Vice Chair for Supervision Randal Quarles said on Monday.

European Central Bank policymakers on Monday started a public debate about ending emergency bond purchases launched at the start of the coronavirus pandemic last year, with faultlines already emerging between so-called hawks and doves.

Bullion tends to fall out of favour amid tighter monetary policy.

Zimbabwe’s central bank will allow large-scale gold mining companies to directly export a portion of their bullion, an official said.

China’s net gold imports via Hong Kong more than halved in May from the prior month, when they touched the highest level in nearly three years, as demand faltered amid fresh coronavirus-led restrictions.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3% to 1,045.78 tonnes on Monday from 1,042.87 tonnes on Friday. Silver eased 0.2% at $26.03 per ounce, palladium slipped 0.1% to $2,683.19. Platinum was steady at $1,090.33.

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