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Gold prices climb as U.S. dollar slides

Dollar nudged off over one-week high.
Image: Chris Ratcliffe/Bloomberg

Gold prices rose on Thursday buoyed by a pullback in the dollar while investors also focused on the upcoming U.S. jobs report.

Spot gold rose 0.5% to $1,855.60 per ounce by 12:52. U.S. gold futures was 0.6% higher to $1,859.10.

The dollar index was down 0.3% on the day, slipping off a one-week high touched on Wednesday.

Despite real interest rates set to move up, gold is holding on, supported by economic uncertainty triggered by war in Ukraine and monetary policy tightening, said Kunal Shah, head of research at Nirmal Bang Commodities.

“The key point here is we have not seen such magnitude of monetary tightening before.”

Investors are now looking to more U.S. employment data due later Thursday and to Friday’s U.S. payroll numbers that could give more cues on the Federal Reserve’s rate hike trajectory.

“The U.S. labour market is very tight, serving as a key argument for Fed rate hikes.

“Robust data today could push rate hike expectations further up and put pressure on the gold price again,” Commerzbank analyst Carsten Fritsch said in a note.

While the U.S. policymakers have signalled a 50 basis point interest rate rise this month and next, the outlook beyond that is uncertain.

The Fed already walks a tight rope as it reins in historic inflation while not causing a recession.

While bullion is considered a safe haven during times of political and economic uncertainty, higher interest rates increase the opportunity cost of holding gold, which bears no interest.

Spot silver rose 1.1% to $22.05 per ounce, platinum gained 1.1% to $1,007.75, and palladium was 0.7% higher at $2,011.65.

London markets are closed for Queen Elizabeth’s Platinum Jubilee bank holidays.

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