Gold rose again above $4,600 an ounce, as investors assessed the Federal Reserve's approach to stubborn inflation ahead of its annual meeting in Jackson Hole this week.
The precious metal rose as much as 1.1%, recovering most of the losses it suffered in the previous session. Gold had ended a five-day winning streak on Wednesday after data showed that US inflation remained well above the Federal Reserve's target, increasing the likelihood of an interest rate hike by the central bank. The dollar jumped its biggest amount in two weeks, and bond yields also rose following the release of the data.
However, gold has risen by about 14% this month, supported by fresh momentum from the US Treasury Department’s unexpected intervention in the bond market last week.
Efforts to control the cost of U.S. debt have revived interest in what is known as currency devaluation trading, which helped drive gold's record rise last year, when investors bought the metal to hedge against runaway budget deficits and a weakening dollar.
Liu Xiao, an analyst at Chinese brokerage firm Zijin Tianfeng Futures Co., said that despite Wednesday's decline, gold remained close to its five-day moving average, which is a sign of strength.
The recovery in recent weeks has also pushed the metal above its 200-day moving average, which is often seen as an important measure of longer-term momentum.
Investors are awaiting signals from Warsh
Later this week, investors will be looking for clues about the Federal Reserve's approach to inflation when Kevin Warsh delivers his first major speech as central bank chairman.
The highly anticipated speech on Friday at the Jackson Hole symposium provides Warsh with an opportunity to respond to criticism that he has not been forthright about his views on the economy.
Liu said: If Warsh's speech does not pave the way for an interest rate hike in September, the market is likely to interpret it as dovish.
Questions about the independence of the central bank, another issue that has previously helped gold rise, have also resurfaced, with Federal Reserve Governor Lisa Cook again denying unsubstantiated allegations of mortgage fraud repeated by President Donald Trump, while the US president considers whether to renew his attempt to impeach her.
Gold rose 1.1% to $4,639.45 an ounce at 10:17 a.m. in Singapore. Silver climbed 2% to $69.49 an ounce.
Platinum and palladium also rose, while the Bloomberg Dollar Spot Index, a measure of the U.S. currency, fell 0.1% after ending the previous session up 0.2%.
