NEW YORK: Gold rose to its highest in more than three months on Monday, building on gains from last week as a muted dollar boosted appeal, while investors awaited US inflation data and remarks from Federal Reserve Chairman Kevin Warsh this week for signals on the interest-rate path.
Spot gold was up 1percent at USD4,649.08 per ounce by 1004 GMT, hitting its highest level since May 15, while US gold futures rose 0.6percent to USD4,706.20. Bullion rose more than 5percent last week after the US Treasury Department’s buyback support plan pushed the dollar lower, making greenback-priced bullion more affordable for foreign investors.
“The consolidation of gold prices above USD4,600, and the potential for further gains, will depend to a large extent on the US dollar remaining under pressure and Treasury yields stabilizing at current levels or declining further,” ActivTrades senior analyst Ricardo Evangelista said.
The dollar was pinned near multi-month lows on Monday. Market participants are now awaiting the July Personal Consumption Expenditure price index due on Wednesday and Warsh’s speech at the Jackson Hole Symposium on Friday to gauge the policymakers’ outlook on interest rates.
Traders are pricing in about a 36percent chance of a rate-hike in September, with a 64percent chance of the Fed leaving rates unchanged, according to the CME FedWatch Tool.
Although gold is typically seen as an inflation hedge, higher interest rates tend to diminish bullion’s appeal due to its non-yielding characteristic. On the geopolitical front, the US threatened Iran with what it called “the greatest financial offensive ever marshalled” as it prepared to roll out economic sanctions targeting Iran’s trade partners.
Yet, oil prices slipped more than USD1 a barrel as investors took profits ahead of an expected announcement from Washington. Spot silver held steady at USD68.93 per ounce, platinum gained 0.1percent to USD 1,880.17, and palladium dropped 0.4percent to USD1,344.35.
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