Monday, August 8

Gold gains as Fed’s Powell offers respite from big rate hike jitters


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Gold prices extended gains on Thursday

after comments from the US Federal Reserve chair Jerome Powell

on future interest rate hikes sounded less hawkish than feared,

dragging the dollar and Treasury yields lower.

Spot gold was up 0.2% at $1,737.44 per ounce, as of

0205 GMT, after rising 1% to a two-week high in the previous

session. US gold futures rose 1% to $1,736.70 per

ounce.

The US central bank on Wednesday raised rates by

three-quarters of a percentage point for the second straight

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meeting to combat soaring inflation.

Powell said another “unusually large” increase in interest

rates may be appropriate at the September meeting, but the

decision will be determined by the incoming economic data and it

would not give forward guidance.

“Powell left the door slightly open to a review of the rate

situation and provided some sort of light at the end of the

tunnel that we’re not going to be seeing increasing rates going

into next year as well,” said Edward Meir, an analyst with ED&F

Man Capital Markets.

“That knocked the dollar and US yields down causing the

flurry we saw in gold. In the near-term, gold prices are

expected to move higher with good chance of testing resistance

between $1,780 to $1,800 over the next month.”

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The dollar fell 0.6% overnight and was languishing

near a three-week low on Thursday, making greenback-denomated

gold less expensive for other currency holders.

Benchmark US Treasury yields fell to hover

near two-month lows. Lower bond yields reduce the opportunity

cost of holding non-interest bearing gold.

Meanwhile, a sharp fall in purchases by investors pulled

global gold demand down 8% in the second quarter compared to the

same period in 2021, the World Gold Council said.

Elsewhere, spot silver gained 0.4% to $19.20 per

ounce, platinum rose 0.4% to $890, and palladium

climbed 0.6% to $2,042.51.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu and Uttaresh.V)

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