NEW YORK: Gold jumped over 3percent on Wednesday, propelled by a weaker US dollar and lower Treasury yields, while markets monitored developments in the Middle East for fresh signals on inflation and interest rate outlook.
Spot gold climbed 3percent to USD4,199.78 per ounce by 09:44 a.m EDT (1344 GMT). Bullion touched its highest level since June 22 earlier in the session.
U.S gold futures rose 2.6percent to USD4,260.80. “Two days of lower yields and a week of softer dollar seem to be clearing brush in the path ahead of gold and silver,” said Tai Wong, an independent metals trader.
The US dollar was near its lowest against the Japanese currency in three months, making dollar-priced bullion more affordable for overseas buyers, while yield on US 10-year notes hovered near one-week lows.
US private payrolls growth slowed in July, with payrolls increasing 44,000, below economists’ expectations for a 70,000 gain, the ADP national employment report showed on Wednesday.
Meanwhile, Fed Bank of Kansas City President Jeff Schmid said on Tuesday that some sort of monetary policy tightening is needed to get “too high” inflation back to the 2percent target, while Minneapolis Fed President Neel Kashkari in an interview with CNBC said he believed now is the time to start slowly moving interest rates higher. Traders are pricing in about a 57percent chance of a rate hike in the central bank’s September meeting, according to the CME FedWatch Tool. Higher interest rates could diminish bullion’s appeal due to its non-yielding characteristic.
US President Donald Trump said his administration had “very good discussions” with Iran, fuelling expectations of an imminent end to the five-month conflict.
Spot silver rose 4.2percent to USD62.05 per ounce, platinum gained 0.5percent to USD1,725.58, after touching its highest level since June 17, and palladium climbed 0.5percent to USD1,359.80, and touched its highest level since early June earlier.
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