Gold Shines as Dollar Retreats

Gold extended its gains, supported by a decline in the US dollar and Treasury yields, as investors awaited key jobs data that could clarify expectations on whether the Federal Reserve will raise interest rates this month.

The precious metal fell to its lowest level since August 7 on Wednesday before closing the session up more than 1%, as the dollar index retreated from its highest level in about three weeks, while Treasury yields dropped from their highest levels in several years.

Giovanni Stavropoulos, an analyst at UBS, said, “The slight weakness in the dollar and the modest decline in US interest rates are helping gold. With the Federal Reserve currently providing no forward guidance, gold remains highly sensitive to changes in market expectations for the Fed’s September meeting.”

Bets on an interest rate hike increased after Fed Chair Kevin Warsh last week indicated that the US central bank might be forced to raise rates if inflation remains above its target level. For other precious metals, silver rose 1.1% in spot trading to $66.02, platinum gained 1% to $1,777.35, and palladium increased 1.7% to $1,367.94.