Gold on Friday hit a more than three-week high, amid speculation that the US Federal Reserve could slow the pace of interest rate increases as the US economy slows.
Bullion’s climb, supported by a weaker US dollar and declining US Treasury yields, saw spot gold gain about 0.4 percent to US$1,762.50 an ounce to post a second straight weekly gain.
While the Fed raised rates by 75 basis points again this week, data showing that the US is in a technical recession signaled that the central bank could become less aggressive as it continues to combat inflation.
Despite the recent rebound, gold recorded a fourth straight monthly loss.
US Secretary of the Treasury Janet Yellen gave a glass-half-full assessment of the economy, acknowledging a slowdown she called necessary to tame inflation, while rejecting the notion the country had entered a recession.
“Gold bugs are falling like dominoes, but given the slowing trend in growth, [US Fed Chairman Jerome] Powell catalyzed a short covering rally across all assets by tying a jumbo-sized September hike to data. Gold markets are set-up for additional price weakness to ensue,” TD Securities senior strategist Daniel Ghali said in a note.
Investors are likely to turn their focus to next week’s monthly jobs report from the US government, which is forecast to show another solid month of hiring.
Powell said the labor market remains “extremely tight,” referencing a near-record number of job openings and historically low unemployment.
“If the US economic data turn out to be weaker next week, gold is likely to make further gains,” Commerzbank AG analyst Carsten Fritsch said in a note.
“This applies in particular to the report on the labor market, as Fed Chair Powell has still been describing the market as robust, which besides the persistently high inflation is another argument in favor of further rate hikes,” Fritsch said.
‧Silver for September delivery rose US$0.33 to US$20.20 an ounce, up 8.49 percent from a week earlier, while September copper rose US$0.10 to US$3.57 a pound, gaining 6.57 percent weekly.
Additional reporting by Reuters and AP
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