Gold prices gained on Tuesday as the dollar and Treasury yields retreated from recent highs ahead of crucial US inflation and jobs data this week that could define the outlook for interest rates.
Spot gold climbed 0.3% to $1,924.84 per ounce by 0354 GMT, hovering close to its highest level since Aug. 10 reached on Monday. US gold futures gained 0.3% to $1,952.90.
Gold prices are seeing short-covering by short-term speculators as a minor key resistance at $1,907 that coincided with the 200-day moving average has been surpassed, said Kelvin Wong, a senior market analyst, Asia Pacific, OANDA.
Helping gold further, the US dollar dipped 0.2% against a basket of major currencies, while benchmark US 10-year Treasury yields moved further away from their highest levels since 2007 hit last week.
A weaker dollar tends to make gold, which yields no interest, less expensive for other currency holders. Among the string of US economic data scheduled to be released this week, focus would be on the Federal Reserve’s preferred inflation measure, the PCE price index due on Thursday, and the non-farm payrolls report on Friday.
“Now, the Fed’s view is that there will not be a recession. Additionally, with sticky core inflation, the Fed could hold rates higher for longer and may even raise them some more,” Heraeus analysts wrote in a note.
Although with rates on loans now much higher, consumer spending is likely to slow and a recession becomes almost inevitable, which would result in falling bond yields and a weaker dollar and gold prices could rebound, they added.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3% to 886.64 metric tons on Monday.
Elsewhere, spot silver added 0.3% at $24.32 per ounce and platinum gained 0.2% to $966.11, having opened at its highest level in a month. Palladium lost 0.8% to $1,244.32.
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