By Swati Verma
(Reuters) – Gold prices inched higher from a one-week low on Wednesday, as U.S. Treasury yields and the dollar eased from the previous session’s highs, although expectations that interest rates will stay elevated curbed further gains in bullion.
Spot gold gained 0.1% to $1,927.59 per ounce by 0603 GMT, having hit its lowest since Aug. 29 earlier in the session. U.S. gold futures erased earlier losses and steadied at $1,952.90.
The U.S. dollar was down 0.2%, having hit a near six-month peak on Tuesday, while 10-year bond yields fell from more than one-week highs as markets weighed cues on interest rates. [USD/] [US/]
Federal Reserve Governor Christopher Waller said the latest round of economic data was giving the U.S. central bank space to see if it needed to raise interest rates again.
“Fed’s guidance for policymaking to be on a meeting-by-meeting basis has kept bets of additional tightening in November/December alive,” said Yeap Jun Rong, a market strategist at IG. [FED/WATCH]
Additionally, a jump in oil prices does not provide much reassurance for the global inflation outlook and further convinces investors of a high-for-longer rate view, he said, adding that the U.S. CPI data next week would determine the Fed’s rate outlook over the coming months. [O/R]
Markets have currently priced in a 93% likelihood of a Fed pause in September, although there’s still nearly 40% chance of a rate hike in November or December, according to CME’s FedWatch tool.
Higher U.S. interest rates and Treasury yields raise the opportunity cost of holding gold, which does not earn any interest.
With gold’s 200-day moving average sitting around $1,920 an ounce, it could offer a level of support over the near-term, unless yields surge further, said Matt Simpson, a senior analyst at City Index.
Elsewhere, spot silver rose 0.2% to $23.56 per ounce, platinum dipped 0.3% to $923.79 and palladium gained 0.4% to $1,217.21.
(Reporting by Swati Verma in Bengaluru; Editing by Rashmi Aich, Sherry Jacob-Phillips and Subhranshu Sahu)
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