Gold gains as bond yields tick lower, traders await more US data

Gold prices edged higher on Thursday, as a slight pullback in Treasury yields offered some respite from a robust dollar, while investors looked forward to more U.S. economic data to gauge the outlook for interest rates.

Spot gold was up 0.3% at $1,922.70 per ounce by 1213 GMT, after hitting a one-week low on Wednesday. U.S. gold futures were up 0.1% at $1,946.80.

“Quite clearly we’ve seen a reversal in U.S. economic data from weakness to strength recently and that once again added to expectation that the Federal Reserve may not yet be done hiking rates,” said Ole Hansen, Saxo Bank’s head of commodity strategy.

“In addition, the dollar has reached fresh six-month highs… Gold continues to be very data-dependent, we have initial jobless claims later in the day but the significant one will be CPI (consumer price index) data due next week.”

The dollar held firm near its highest since March after stronger-than-expected U.S. services sector data. Meanwhile, benchmark 10-year Treasury yields slipped from a two-week peak scaled in the previous session. [USD/] [US/]

Boston Fed President Susan Collins on Wednesday called for the central bank to take its next monetary policy steps carefully, while acknowledging signs of progress in cooling inflation.
According to the CME FedWatch tool, traders see a 93% chance of the Fed leaving rates unchanged at its Sept. 19-20 meeting. Higher U.S. interest rates raise the opportunity cost of holding gold, which does not earn any interest.

U.S. economic growth was “modest” in recent weeks amid cooling job growth and inflation in most parts of the country, the Fed’s “Beige Book” published on Wednesday showed.

Investors will keep an eye out for U.S. initial jobless claims data due at 08:30 a.m. EDT (1230 GMT) for more clarity on labour market conditions.

Silver fell 0.7% to $23.02 per ounce, platinum lost 0.8% to $901.19 and palladium slipped 1.6% to $1,195.02.

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