The dollar fell 0.8% as the yen strengthened, while traders remained on alert for possible intervention by Japanese authorities to prop up the battered currency
Gold rose on Thursday as the U.S. dollar weakened and inflation eased, with traders dialing back bets on interest rate hikes a day after Federal Reserve Chair Kevin Warsh offered little clarity on policy.
Spot gold was up 1% at $4,104.59 per ounce by 1:40 p.m. EDT (1740 GMT). U.S. gold futures for August delivery gained 1.6% to settle at $4,160.60.
The dollar fell 0.8% as the yen strengthened, while traders remained on alert for possible intervention by Japanese authorities to prop up the battered currency. A weaker dollar makes greenback-priced bullion more affordable for buyers overseas. [USD/]
Prices were little changed after a Commerce Department report showed Personal Consumption Expenditures Price Index fell 0.1% in June, in line with economists’ expectations in a Reuters poll. The easing is likely to be temporary as renewed hostilities in the Middle East raise oil prices. [O/R]
The PCE data looks “a little bit better than the market expected. So for now the environment on the inflation side is more or less stable,” said Bart Melek, global head of commodity strategy at TD Securities.
“The Middle East war isn’t looking like it’s getting over anytime soon. So these inflation pressures that were reversed over the last few months may come back. And the view out there is that the central bank will ultimately respond. And that is keeping gold breaking out beyond the resistance levels, which we see at about 4150, 4200.”
The Fed on Wednesday left interest rates unchanged. After the release of the policy statement, Warsh pledged an unwavering commitment to bring inflation down, a message that left markets confused about just what he was prepared to do. Spot gold prices rose about 2% after the policy decision.
Traders see a 61% chance of a rate hike at the Fed’s September 15-16 meeting, down from about 77% before the Fed meeting, according to CME Group’s FedWatch Tool. [FEDWATCH]
Higher-for-longer rates tend to diminish bullion’s appeal due to its non-yielding characteristic.
U.S. jobless claims increased less than expected last week, suggesting labor market conditions remained stable, another government report showed.
Spot silver rose 2% to $58.79 per ounce, platinum gained 2.5% to $1,652.32, and palladium climbed 4.4% to $1,301.39.
