Gold reverses fall to inch up from five-month lows as bankers meet

Mon Aug 21 2023

Gold prices edged up from five-month lows on Monday after declining in the previous five sessions, as investors saddled up for a gathering of central bankers in Jackson Hole, Wyoming, this week for an outlook on the economy and interest rates.

Spot gold rose 0.3% to $1,892.88 per ounce by 4.46am GMT (6.46am), while US gold futures added 0.3% to $1,921.70.

Gold had dropped to its lowest since mid-March at $1,883.70 last week, as buoyant economic data raised bets for higher-for-longer US interest rates, reducing demand for the non-yielding commodity.

“The dollar index is holding above the 103 level, which is making forward progress for assets such as gold quite the struggle,” KCM trade chief market analyst Tim Waterer said.

Investors’ focus will be on US Federal Reserve chair Jerome Powell’s speech on Friday, as central bankers from around the world assemble in Jackson Hole for their annual conference.

“It will be interesting to see if Fed chair Jerome Powell echoes the hawkish tone of the most recent [federal open market committee] minutes,” Waterer added.

The Fed is likely to be done raising interest rates, according to a strong majority of economists polled by Reuters, and a slight majority now expect the central bank to wait at least to end-March before cutting them.

Rising Treasury bond yields and home mortgage rates may reduce support at the Fed for additional interest rate increases, the prospect of which have already been ebbing due to weaker inflation.

Meanwhile, Asian markets stumbled after China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing’s run of disappointing stimulus steps.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3% on Friday, reporting its first inflow since late-July.

In other metals, spot silver climbed 0.7% to $22.85 per ounce and platinum was up 0.1% at $910.83. Palladium gained 0.2% to $1,258.49.

Source: http://in.reuters.com