Gold prices increased by roughly 1% to a three-week high, as the dollar and U.S. Treasury yields fell on Tuesday. Investors hoped the U.S. Federal Reserve would take a more gradual approach to interest rate increases.
As of 10:02 a.m. EDT (1402 GMT), spot gold was up 0.9% at $1,713.80 per ounce, its highest level since September 13.
U.S. gold futures increased 1.2% to $1,722.90.
Benchmark U.S. 10-year Treasury yields dropped to nearly two-week lows as the dollar’s slump continued, making gold more affordable for holders of foreign currencies.
According to Bob Haberkorn, senior market strategist at RJO Futures, “the market is kind of pricing in that the Fed is going to back off here a little bit”. He said that this was why everybody was seeing that move back up in gold and silver.
Since March, the U.S. central bank has aggressively increased interest rates. Its policymakers have indicated that additional rate increases are necessary to control inflation.
Looking ahead, information on American non-farm payrolls that is due on Friday may provide more details on the Fed’s tightening of policy.
Haberkorn claimed that gold prices would rise if the jobs report was lower than predicted. The Fed could maintain these interest rates if it came out significantly stronger, according to how the market may take it.
Gold experienced its largest daily percentage gain since March on Monday. Although the potential cost of owning zero-yield bullion increases with rising U.S. rates.
Saxo Bank’s Ole Hansen, who is head of commodity strategy, thinks that gold is not yet out of the woods, but at least a fairly significant rebound has been seen. Hansen added that short covering had caused the initial increase.
Spot silver increased by 1% to a more than three-month high of $20.97 per ounce. In the previous session, prices increased by more than 9%, which marked their biggest day in 14 years.
The price of palladium increased 4.3% to a five-month high of $2,316.56 while platinum increased 2% to $920.17.
