Gold Futures Settle Higher As Dollar, Bond Yields Drop
Gold futures settled notably higher on Wednesday as the dollar shed ground and bond yields dropped.
Gold prices climbed higher as data showing contraction in business activity in most of the major economies across the globe triggered safe-haven buying.
Investors also looked ahead to the Jackson Hole Symposium, scheduled to take place later in the week.
The dollar index, which surged to 103.93, tumled to 103.30, losing about 0.25%.
Gold futures for December ended higher by $22.10 or about 1.2% at $1,948.10 an ounce.
Silver futures for September ended up $0.942 at $24.392 an ounce, while Copper futures for September settled at $3.8085 per pound, gaining $0.0515.
The economic symposium in Jackson Hole, Wyoming, later this week will feature meetings by global central bank leaders as well as a speech by Federal Reserve Chair Jerome Powell, with traders hoping for some clarity on the Fed’s plans to keep inflation on a downward path.
“The US economy is weakening, not as much as Europe, so that should provide some relief from the surge with global bond yields,” says Edward Moya, Senior Market Analyst at OANDA. “Gold could have a major rebound if we see a short squeeze in the bond market, but a longer-term bullish trend seems unlikely as interest rates will likely stay higher-for-longer.”
S&P Global released data showing a slowdown in the pace of growth in U.S. service sector activity in the month of August as well as a contraction in manufacturing activity during the month.
Eurozone business activity contracted further in August as the region’s downturn spread further from manufacturing to services, according to PMI survey data published earlier today.
The S&P Global composite index flash reading fell to 47.0 from 48.6 in July, hitting its lowest since November 2020.
The U.K. manufacturing PMI fell from 45.3 to 41.5 in August, hitting a 39-month low, while the services PMI fell from 51.5 to 48.7, touching a 7-month low.
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