Gold prices climbed on Thursday as the dollar eased from an 18-month peak, helping bullion recover from a two-month low, while traders weighed the prospect of another US Federal Reserve rate hike this year.
Spot gold was up 0.7 per cent at $4,141.09 per ounce by 0140 GMT. On Wednesday, bullion prices touched their lowest level since August 5 as a firmer dollar and higher US Treasury yields weighed on the market.
US gold futures for December delivery gained 0.6 per cent to $4,165.10.
The pullback in dollar makes greenback-denominated gold less expensive for holders of other currencies.
“The short-term investment case for gold remains challenged… We would need to see a break above $4,275 to become more constructive on the near-term upside,” said Chris Weston, head of research, Pepperstone.
“If markets begin treating rising long-end yields as a reflection of sovereign credit and fiscal risk rather than stronger economic fundamentals, gold could start to diverge positively from bond yields and the debasement trade could return with greater force.”
Fed policymakers were divided last month over the rationale for raising interest rates, with “some participants” seeing a hike as needed to keep the impact of energy and other price shocks at bay, but a more hawkish core viewing it as necessary to guard against emerging demand-driven inflation, minutes showed.
Traders see only an 18 per cent chance of a rate hike later this month, but are pricing in an 80 per cent likelihood of an increase in December, according to CME’s FedWatch tool.
Higher rates diminish the appeal of non-yielding gold.
The global economy is under threat from persistently high energy prices, record public debt and risks from the AI investment boom, International Monetary Fund Managing Director Kristalina Georgieva warned, urging governments to implement protective fiscal and monetary policy measures.
Among other metals, spot silver steadied at $60.18, platinum added 2.1 per cent to $1,665.00 and palladium climbed 1.6 per cent to $1,142.86.