On expectations of a less aggressive Fed, gold prices are reaching a 3-week high

30 Aug 2023 , 10:16 AM

After disappointing statistics on consumer confidence and job vacancies in the United States dampened expectations that the Federal Reserve will raise interest rates this year, gold prices on Wednesday remained close to their best levels in three weeks.

Spot gold was holding steady at $1,936.59 an ounce, trading close to its highest levels since Aug. 7 were reached on Tuesday. At $1,964.30, U.S. gold futures were stable.

After the release of the data and a weaker dollar, U.S. Treasury yields fell to three-week lows on Tuesday, making gold more affordable for holders of foreign currencies. Lower interest rates increase demand for gold that doesn’t pay interest.

As the labour market steadily slowed down in July, there were fewer job postings in the United States than they had been for over 2-1/2 years. This increased anticipation that the Federal Reserve will maintain its current interest rate policy.

After two consecutive months of rises, U.S. consumer confidence decreased more than anticipated in August due to resurgent inflationary concerns, a survey released on Tuesday revealed.

Investors are now anticipating the second estimate of April-June GDP from the Commerce Department later in the day, as well as the non-farm payrolls report on Friday and the personal consumption expenditures price index on Thursday.

In the absence of substantial economic slowdown or disinflation, former central bankers said on Tuesday that the U.S. Fed is unlikely to give specific indications regarding whether it will halt interest rate hikes or consider reducing rates.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported on Tuesday that its holdings increased by 0.3% to 889.23 metric tonnes.

Spot silver dropped 0.2% to $24.68 per ounce in other trading, but it was still trading at a month high.

After reaching its highest level since July 19 in the previous session, platinum declined 0.1% to $975.14. To $1,245.44, palladium fell 0.3%.

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