Gold increased as an equity selloff drove investors into bonds, pushing Treasury yields lower.
Bullion rose as much as 1.8% to trade near $4,180 an ounce, recouping from previous session’s losses, while silver also gained. Treasury yields, which spiked Wednesday on data showing US consumer prices rose the most since April, were down to the lowest in several weeks Thursday as a tech-driven stocks rout spurred haven demand. Lower yields typically push up gold, which pays no interest.
The precious metals briefly pared gains following hotter-than-expected September producer prices and retail sales. The producer price index advanced 1.3% from a month earlier and 6.3% from a year earlier, which likely keeps Federal Reserve officials on track for additional interest-rate increases.
The yellow metal still faces headwinds. Traders will be monitoring Fed Chair Kevin Warsh’s remarks late Thursday New York time for clues on whether officials are pivoting from a skip to an October rate hike in light of the latest inflation data. Warsh speaks in Bangkok before the central bank begins a media blackout on Saturday ahead of the Oct. 27-28 meeting.
“The US dollar has eased a bit, and the reversal in Treasury yields are also helping,” said Fawad Razaqzada, a market analyst at Forex.com. “I would be reluctant to interpret today’s gains as a clear signal that the correction is over,” he said in a note, adding his near-term gold outlook remains modestly bearish.
Gold has dropped by more than a fifth since the start of the US-Iran war in late February. The conflict roiled energy markets, triggering global inflation and monetary tightening. Wednesday’s increase in headline CPI was driven in large part by surging fuel costs, while underlying price pressures also rose.
Spot gold was 0.0017% higher at $4,171.51 an ounce as of 4:53 p.m. New York time. Silver rose 3.3% to $57.40, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.3% lower.
(By Mariana Durao and Yihui Xie)
