Gold prices climbed to two-week highs on Thursday as a retreat in the US dollar and Treasury yields revived investors’ appetite for bullion as they wait to see what interest rate signals central bankers offer at the Jackson Hole meeting.
Spot gold rose 0.3% to $1,920.60 per ounce by 0335 GMT, hitting its highest level since Aug. 10. US gold futures were flat at $1,948.70.
The Federal Reserve is holding its annual symposium in Jackson Hole, Wyoming, from Aug. 24-26, with investors’ focus on Chair Jerome Powell’s speech on Friday for confirmation on whether interest rates are going to stay higher for longer.
Higher US rates raise the opportunity cost of holding gold, which yields no interest.
The dollar nursed a sharp pullback against Asian currencies after softer-than-expected global economic data muddied the interest rate outlook and pushed down US yields.
US business activity approached the stagnation point in August, with growth at its weakest since February as demand for new business in the vast services sector contracted.
“The weaker (PMI survey) result pares the risk of further rate hikes in the US and Europe in our view, which is broadly positive for gold prices and applies downward pressure to US Treasury yields,” said Baden Moore, head of carbon and commodity strategy at National Australia Bank.
Traders on Wednesday firmed up bets that the European Central Bank would pause hiking rates in September as sharp contractions in business activity pointed to deepening economic pain.
Britain’s economy is also slowing and might be heading for a recession as it feels the impact of 14 back-to-back rate increases by the Bank of England to fight high inflation.
In other metals, spot silver fell 0.2% to $24.27 per ounce and platinum
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