Gold hits 1-week high as dollar dips; Fed symposium in focus

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Gold prices hit a one-week high on

Thursday, buoyed by a weaker dollar, while investors awaited

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direction on rate hikes by the U.S. Federal Reserve from a key

central bankers’ meet this week.

Spot gold was up 0.6% at $1,761.68 per ounce, as of

0747 GMT, after hitting a peak since Aug. 18. U.S. gold futures

were up 0.8% at $1,775.40.

The dollar dipped 0.3%, making gold less expensive

for buyers holding other currencies. Benchmark U.S. 10-year

Treasury yields were off multi-week highs hit in the

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previous session.

Investors across financial markets are bracing for the U.S.

central bank to reiterate its commitment to tame inflation or

signal a “pivot” to subdued interest rate hikes. Powell will

address the annual global central banking conference at Jackson

Hole on Friday.

“Will the Fed still be looking at aggressively increasing

interest rates and affecting the economy and whether that will

be on the back-burner for now … People want to have clarity on

this,” said Brian Lan, managing director at Singapore-based

dealer GoldSilver Central.

Monetary policy will be the key factor in the short-term for

the gold market, with higher interest rates affecting consumer

behavior, Lan added.

Rate hikes increase the opportunity cost of holding bullion,

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which pays no interest, while boosting the greenback.

The Fed has raised its benchmark overnight interest rate by

225 basis points in total since March to fight sky-high

inflation and indicated that further tightening would depend on

economic data.

“After the Jackson Hole meet, I am expecting gold to shoot

up by at least $40-$50,” said Kunal Shah, head of research at

Mumbai-based Nirmal Bang Securities.

The weak housing market, lower labor participation rates

and economic uncertainties make a strong case for investors to

go long on gold, Shah added.

Spot silver gained 0.9% to $19.34 per ounce, platinum

rose 0.7% to $882.88 and palladium climbed 1.7% to

$2,067.69.

(Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu

Sahu and Sherry Jacob-Phillips)