Gold prices edged lower on Thursday, with traders taking profits from gains in the previous session and a rise in oil prices putting the focus on inflation risks.
Spot gold was down 0.3% at $4,509.91 per ounce by 12:15 p.m. EDT (1615 GMT), retreating from the highest level since June 2 that it hit earlier in the session.
Gold had leapt over 4% on Wednesday, while the U.S. dollar
and bond yields dropped sharply after the Treasury’s
announcement it would increase buybacks of longer-dated bonds.
U.S. gold futures edged 0.5% higher to $4,566.40.
“Gold has come under routine profit-taking pressure
following the previous session’s strong gains,” said Jim
Wyckoff, a market analyst at American Gold Exchange.
The somewhat hawkish U.S. Federal Reserve minutes and higher
oil prices, which have revived inflation concerns, also
undermined the metal, he added.
It pared some losses after Treasury Secretary Scott Bessent
said in a CNBC interview on Thursday that the government might
increase repurchase of Treasury bonds, which could be more than
$4 billion per issue.
Although investors often regard gold as a safeguard against
inflation, higher interest rates can curb demand by increasing
the opportunity cost of holding a non-yielding asset.
Minutes from the Fed’s July meeting released on Wednesday
highlighted some policymakers’ concerns about inflation and
showed that several officials remained open to further rate
hikes.
Traders have priced in a 67.4% chance of a Fed hold in
September, according to the CME FedWatch Tool.
Oil prices extended their rally to a three-week high as
stalled talks over the Iran conflict sustained market concerns
about Middle East supply disruptions.
“With our U.S. economists expecting the Fed to remain on
hold, we see scope for gold to exceed $5,000/oz in 2027,
potentially earlier,” but with scope for volatility too, Morgan
Stanley analysts said in a note.
Among other metals, spot silver rose 1.8% to $68.10
per ounce, platinum gained 0.3% to $1,830.28 and
palladium edged 0.1% lower to $1,331.07.
Source: Khaleej Times