Gold gained on Friday as the dollar eased against the yuan after promising Chinese economic data boosted recovery hopes in the world’s top bullion consumer, although the possibility of further U.S. interest rate hikes kept investors on edge.
Spot gold rose 0.4 percent to $1,917.59 per ounce by 0701 GMT. Bullion dropped to near $1,900, its lowest level since Aug. 23, on Thursday. U.S. gold futures gained 0.3 percent to $1,938.90.
The yuan hit two-week highs against the U.S. dollar after data showed China’s factory output and retail sales in August beat forecasts, making greenback-priced bullion more attractive for Chinese buyers.
The focus now shifts to the Federal Reserve’s Sept. 19–20 policy meeting.
“The outlook for rates to be kept high for longer has been keeping non-yielding gold prices under pressure,” said Yeap Jun Rong, a market strategist at IG.
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“Given the still-resilient economic conditions in the U.S., it does not seem to warrant the need for rate cuts anytime soon, with the timeline for cuts constantly pushed back into mid-next year.”
Data on Thursday showed U.S. producer prices increased by the most in more than a year last month, while retail sales also beat expectations, boosted by a surge in gasoline prices.
This comes after U.S. consumer prices in August increased by the most in 14 months, keeping bets alive for further U.S. rate hikes after a likely pause next week.
“Numerous Fed officials have made it clear the task of combating inflation is not yet over. We, therefore, do not view monetary policy as supportive of gold until well into 2024,” HSBC said in a note.
“Institutional investors have yet to commit to gold, as net long positions on the CME and ETF holdings indicate.”
Positive Chinese data also supported other precious metals, setting them on track for weekly gains. Spot silver climbed 2 percent to $23.08 per ounce, platinum gained 0.5 percent to $910.91, and palladium steadied at $1,250.40.
