(Bloomberg) — Gold steadied after posting its biggest gain in more than a month as investors weighed renewed concerns over economic growth amid tightening monetary policy.
Bullion is heading for its first weekly advance in six weeks as the US dollar retreats from a record hit on July 14 and as Treasuries surged Thursday, pushing the 10-year yield below 3%. Fears of a recession are mounting as data Thursday showed jobless claims at an eight-month high and a slump in one regional factory outlook. One index of leading economic indicators is pointing to a contraction.
“We are finally starting to see some weakness in the US dollar index, as gold bounces off an oversold level, recovering above $1,700 for now,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “We now expect this initial flight to the US dollar to start rotating back into gold as investors search for a true and reliable hedge against inflation.”
Investors will closely watch the Federal Reserve’s meeting on July 26-27 for clues on its monetary policy path. On Thursday, the European Central Bank raised its key interest rate by 50 basis points, the first increase in 11 years, as it confronts surging inflation. Traders were also monitoring President Joe Biden’s condition after he tested positive for Covid and showed mild symptoms.
Spot gold was little changed at $1,717.86 an ounce at 9:08 a.m. in Singapore. Prices rose 1.3% Thursday after first dropping to the lowest intraday level since March 2021. The Bloomberg Dollar Spot Index was steady after falling 0.2% in the previous session. Silver, palladium and platinum were little changed.
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Source:bloomberg