Dollar Weakness Fuels Gold Price Surge Ahead of US Jobs Data
Gold prices continued their upward trend on Thursday, buoyed by a weaker US dollar and falling Treasury yields. The precious metal's advance was also supported by investor expectations ahead of the Federal Reserve's upcoming interest rate decision.
The spot price of gold jumped 1.2% to $4,437.08 per ounce, while US gold futures climbed 1.6% to $4,483.30. This followed a volatile session on Wednesday, when gold initially dropped to its lowest level since August 7 before reversing course to close with gains exceeding 1%.
Giovanni Staunovo, an analyst at UBS, attributed the weaker dollar and slight decline in US interest rates as support for gold. He noted that the Federal Reserve currently offers no clear forward guidance, making gold highly sensitive to shifts in market expectations for the September meeting.
The CME FedWatch Tool indicates markets currently price in approximately a 60% probability of a rate hike at the monetary policy meeting scheduled for later this month. This was reinforced after Fed Chair Kevin Warsh's remarks last week, suggesting the central bank may need to raise rates if inflation remains above target.