Gold rebounded above $4 600 an ounce as investors turned their focus to the Federal Reserve’s interest-rate path ahead of the annual Jackson Hole gathering.
Bullion rose as much as 1,1 percent, recouping most of the losses sustained in the previous session. The metal snapped a five-day winning streak on Wednesday after data showed that US inflation remained well above the Fed’s target, raising prospects for a rate hike. The dollar jumped the most in two weeks and bond yields climbed after the print.
Still, a resurgent gold is up nearly 15 percent this month, given fresh impetus by the US Treasury’s unexpected intervention in the bond market last week. Efforts to control the cost of the US debt pile have revived interest in the so-called debasement trade that helped power bullion’s record-breaking rally last year, when investors bought the metal as a hedge to protect themselves from runaway budget deficits and a weaker dollar.
Even after Wednesday’s dip, “gold was still around the level of the five-day moving average, which is a sign of strength,” said Liu Shiyao, an analyst at Chinese brokerage Zijin Tianfeng Futures Co. A steady recovery in recent weeks has also taken the metal above the 200-day moving average that’s often viewed as an important measure of longer-term momentum.
Later this week, investors will be seeking clues to the Fed’s approach to inflation when Kevin Warsh makes his first major speech as chairman of the central bank. The much-anticipated address on Friday at the Jackson Hole symposium offers Warsh an opportunity to counter criticism that he hasn’t been forthright with his views on the economy.
“If Warsh’s speech does not lay the groundwork for a rate hike in September, then it will likely be interpreted by the market as dovish,” Liu said. Lower borrowing costs are typically supportive for precious metals, which don’t pay interest.
Questions around the central bank’s independence — another theme that helped gold’s previous rally — have also resurfaced. Fed Governor Lisa Cook again denied unproven mortgage fraud allegations repeated by President Donald Trump, as the US leader considers whether to renew his effort to remove her.
Gold gained 0.6 percentto $4 620.67 an ounce at 1:14 p.m. in Singapore. Silver climbed 1.4 percent to $69.04 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the greenback, slipped 0.1 percent after ending the previous session 0.2 percent higher. – Bloomberg
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