Play store
International gold prices rose more than 1% on Thursday as the US dollar weakened and Treasury yields declined. Investors are awaiting fresh US inflation data for clues about whether the Federal Reserve will raise interest rates again this month.
At 3:17pm Bangladesh time, spot gold rose 1.2% to $4,156.11 per ounce. US gold futures for December delivery gained 1.7% to $4,177.80 per ounce.
The dollar index fell 0.5% on the day, making dollar-denominated gold cheaper for holders of other currencies. Meanwhile, the yield on 10-year US Treasury bonds dropped to its lowest level in three weeks.
Ole Hansen, head of commodity strategy at Saxo Bank, said lower real interest rates and sustained investment demand were helping gold recover from its previous decline. However, technical indicators suggested that the gold market remained fragile.
US consumer inflation rose in September, driven in particular by higher energy prices that pushed up petrol costs. However, price pressures are spreading beyond the energy sector, raising concerns among economists that core inflation could remain elevated for an extended period.
Investors are awaiting Thursday’s producer price index (PPI) and retail sales data for further clues about inflation trends and the Federal Reserve’s future policy decisions. The data are scheduled for release at 12:30 GMT.
Rona O’Connell, head of market analysis at StoneX, said the current trend could continue if annual producer price inflation came in at the expected 5.4%. In that case, bond yields could rise again, requiring close monitoring of market conditions.
According to CME’s FedWatch tool, markets were pricing in a roughly 29% probability of a Federal Reserve rate hike towards the end of this month, up from 22% before the inflation data were released.
Gold is generally considered a hedge against inflation. However, rising interest rates tend to reduce its appeal because the precious metal does not offer interest or other direct returns.
Mary Daly, president of the Federal Reserve Bank of San Francisco, said further interest rate increases might be necessary in the future, although she gave no indication that action would be required at the Fed’s October meeting.
Meanwhile, Federal Reserve Vice Chair for Supervision Michelle Bowman said policymakers had time to assess conditions before taking their next step.
Other precious metals also advanced in international markets. Spot silver rose 1.8% to $56.66 per ounce, while platinum gained 0.3% to $1,611.76 per ounce. Palladium climbed 2.9% to $1,125.37 per ounce. Source: Reuters
