Gold prices rise as dollar concerns persist
Tehran - BORNA - Spot gold rose 0.6% to $4,618.93 an ounce after falling 1% on Wednesday.
US gold futures gained 0.4% to $4,673.60 an ounce.
Kelvin Wong, senior market analyst at OANDA, said concerns over dollar depreciation, alongside worries about the US budget deficit, continue to provide medium-term support for gold prices.
Gold surged more than 5% last week after the US Treasury Department announced that it would double the size of its long-term bond buyback operations, a move that intensified concerns over the weakening value of the dollar.
The US dollar was little changed on Thursday. A weaker dollar makes greenback-priced gold less expensive for holders of other currencies.
Investors are closely watching Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium in Wyoming on Friday for fresh clues about the outlook for gold prices.
Wong said the market is awaiting the speech for greater clarity on how the Federal Reserve intends to navigate the current economic outlook.
If Warsh does not provide clear forward guidance on US monetary policy, current market pricing for potential interest rate increases is likely to remain largely unchanged, Wong added.
According to Reuters, traders are pricing in a 38.1% probability of a Federal Reserve rate hike in September and a 73.6% chance of an increase by December, according to CME Group’s FedWatch tool.
Data released on Wednesday showed that annual US inflation remained unchanged in July and continued to run well above the Federal Reserve’s 2% target.
The unexpected halt in the decline of inflation from its recent peak, which had been affected by the war against Iran, is likely to intensify debate within the US central bank over whether interest rates should be raised or left unchanged.
Gold is traditionally regarded as a hedge against geopolitical and economic risks, but higher interest rates tend to weigh on the non-yielding asset.
Lin Tran, a market analyst at XS.com, said the $4,700 level remains an important short-term resistance point.
Gold may consolidate in the $4,500-$4,700 range before making another upward move, Tran said.
Among other precious metals, spot silver rose 1.2% to $68.88 an ounce, platinum gained 0.9% to $1,844.78, and palladium increased 0.2% to $1,331.50 an ounce.
End Article