On the back of a slight fall, gold is gaining in the price for the third day, as traders wait for new US economic data ahead of an important speech by Federal Reserve Chairman Jerome Powell.
Gold rose 0.7% as the dollar tumbled amid improved sentiment in stock markets. The metal fell to a three-week low earlier this week as the dollar surged on expectations that the US economy would outperform Europe as the continent was wracked by an energy crisis.
In the run-up to the central bank meeting at Jackson Hole, Fed officials made it clear by every action that they expect further tightening of measures to combat inflation. Powell’s speech on Friday is awaited by traders waiting for rate hikes to slow amid signs that higher interest rates are starting to take a toll on the economy.
According to Gnanasekar Thiagarajan, director of Commtrendz Risk Management Services, gold ranged moderately bullish ahead of the meeting as any dovish forward-looking statements from Powell could undermine the strength of the dollar and lift gold. “With manufacturing activity going down, the central bank is expected to tone down its monetary tightening stance.”
On Thursday, initial jobless claims data will be reviewed to see if the US labor market can withstand higher interest rates. US growth figures will also provide a broader but more hindsight view of the economy.
In the meantime, China continues its economic support with another 1 trillion yuan ($146 billion) for measures to stimulate growth and contain the effects of Covid and the housing crisis. This could potentially help gold jewelry demand, which was hit by a slowdown earlier this year.
Spot gold rose 0.7% to $1,763.28 an ounce as of 8:31 am in London, after rising 0.9% over the past two days.
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