Gold Stabilizes Near One-Month Highs as U.S. Interest Rate Hike Expectations

Gold (AMEX:GLD) maintained its position near one-month highs on Thursday, cushioning the losses incurred over the course of this month. This shift came as the likelihood of another U.S. interest rate hike was diminished by recent data indicating a slowdown in the labor market. Traders are closely monitoring the imminent inflation report.

Around 1003 GMT, spot gold (CCOM:GOLD) edged 0.1% higher, reaching $1,944.74 per ounce, closely approaching its August 2 peak of $1,948.79 recorded on Wednesday. Meanwhile, U.S. gold futures experienced a marginal decline of 0.1%, settling at $1,971.50.

The U.S. economy’s growth during the second quarter was slightly less robust than anticipated. Private payrolls experienced a 50% reduction in August compared to July, and job openings hit a 2.5-year low last month.

Ole Hansen, Saxo Bank’s Head of Commodity Strategy, remarked that the weaker-than-expected data has hastened the market’s belief that peak interest rates might occur sooner than the Federal Reserve would prefer.

The U.S. dollar is on track for its first monthly gain in three months, while benchmark 10-year Treasury yields are poised for a fourth consecutive monthly climb. These factors have contributed to a 1% decline in gold prices throughout August.

However, despite this decline, the non-interest-bearing precious metal managed to recoup some of its losses in the latter half of the month, aided by the recent retreat in U.S. bond yields from their 2007 highs.

Prices are currently positioned below a crucial resistance level of $1,950, which Ole Hansen referred to as “the next battleground.” He added that any weakness observed in the Personal Consumption Expenditures (PCE) index, favored by the Federal Reserve to gauge inflation, would bolster a potential upward movement for gold.

Silver retreated by 0.4% to $24.54 per ounce after reaching a more than one-month high on Wednesday.

Platinum inched up by 0.1% to $974.27, set for its second consecutive monthly gain. Meanwhile, palladium increased by 0.4% to $1,227.22, yet it was on track for a 4% fall over the month.

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