The price of gold moved marginally higher today as investors evaluate the new economic data in an attempt to decipher the course of the Fed’s interest rates.
Specifically, the most active gold contract for December delivery ended trading up $5.9, or 0.3%, to close at $1,787.7 an ounce.
The dollar moved lower today, making gold less expensive for investors with other currencies. However, the rally in US 10-year Treasury yields has limited purchases in the precious metal, which does not offer a steady return on investment.
“The cheaper dollar should make it easier for gold to post more gains, although the rise in nominal and real US bond yields today poses obstacles to extending last week’s gains,” notes Exinity’s Han Tan.
Gold is coming off its best weekly performance since March, up 2.2%, after Federal Reserve Chairman Jerome Powell took a less hawkish tone in his remarks following an expected 75 basis point interest rate hike.
Gold also found some support from recently announced negative economic data, including an unexpected contraction in the US economy in the second quarter and a slowdown in manufacturing in the Eurozone.
Gold “could benefit as a safe haven investment if countries fall into recession and central banks find themselves having to choose between inflation and the economy,” said Craig Erlam, senior market analyst at OANDA.
In other metals, silver rose 0.8% to $20.36 an ounce.
Platinum rose 1.3% to $901.6, palladium jumped 3.1% to $2,199, while copper fell 0.9% to $3.54 a pound.