Gold stays near a one-week low as the dollar strengthens on US data

7 Sep 2023 , 10:02 AM

Following five straight sessions of losses, gold remained close to a one-week low on Thursday. In contrast, the dollar remained near its mid-March highs as data revealed that the U.S. services sector unexpectedly expanded in August.

Spot gold was up 0.1% to $1,917.99 per ounce, the lowest price since August 29. Futures for U.S. gold decreased 0.1% to $1,942.20.

The benchmark U.S. Treasury yield increased, the U.S. dollar touched its highest level in six months, and global stock indices declined as Wednesday’s stronger-than-expected U.S. services sector data signaled that inflation pressures are still present.

While there are signs of success in bringing down inflation, Federal Reserve Bank of Boston President Susan Collins said the institution should approach cautiously when it comes to its future monetary policy moves.

Investors were warned by European Central Bank policymakers that one possibility for the coming week was an increase in borrowing costs.

According to Governor Andrew Bailey, the Bank of England is ‘much nearer’ to breaking its streak of raising interest rates.

The opportunity cost of owning gold, which pays no interest, increases as U.S. interest rates rise.

China’s economy is ‘difficult’ to shift from being an infrastructure- and investment-led economy to one that is driven by consumption, according to policymakers, who anticipate chronically weaker growth in China, possibly even more sluggish than current consensus predictions.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased by 0.36% on Wednesday.

Spot silver declined by 0.3% to $23.15 an ounce, platinum increased by 0.5% to $913.24, and palladium decreased by 0.4% to $1,210.35.

Strong demand and flat supply will result in a 2.2% larger supply gap for platinum in 2023 than was previously predicted, according to the World Platinum Investment Council (WPIC). 

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