Gold Holds Near 7-Week Low on Robust Dollar, Fed Fears Slowdown

Gold prices edged up Thursday, but hovered near a seven-week low, limited by a strong dollar and expectations of the US Federal Reserve ending stimulus soon.

Spot gold was up 0.2% to $ 1,729.83 an ounce at 0054 GMT. Prices fell to their lowest level since August 9 at $ 1,720.49 on Wednesday.

US gold futures rose 0.4% to $ 1,729.20.

The dollar index stabilized near the one-year high reached Wednesday, raising the cost of gold for buyers of other currencies.

Benchmark 10-year US Treasury yields were slightly lower, reducing the opportunity cost of holding non-interest-bearing bullion. But they remained above 1.5%, a level not seen since the end of June, still posing a challenge for gold.

San Francisco Federal Reserve Chairman Mary Daly said on Wednesday that the US central bank would be able to start cutting asset purchases by the end of the year, but estimated that a rise in interest rate was still “far away”.

Philadelphia Fed Bank Chairman Patrick Harker said it would be time “soon” to start cutting back on the Fed’s economic stimulus.

Supply constraints hampering global economic growth could worsen further, keeping inflation high for longer, even if the current price spike is expected to remain temporary, the world’s major central bankers warned on Wednesday.

Gold has traditionally been viewed as a hedge against inflation, although the reduction in central bank stimulus and interest rate hikes tend to drive up government bond yields, resulting in lower government bond yields. in turn by a higher opportunity cost for gold which earns no interest.

Silver rose 0.3% to $ 21.58 an ounce.

Platinum gained 0.4% to $ 954.08 and palladium rose 0.3% to $ 1,862.23.