Gold eases after sharp gains as inflation concerns come to the fore

Gold prices edged lower on Thursday, with traders taking profits from gains in the previous session and a rise in oil prices putting the focus on inflation risks.

Spot gold was down 0.3% at $4,509.91 per ounce by 12:15 p.m. EDT (1615 GMT), retreating from the highest level since June 2 that it hit earlier in the session.

Recommended For You

Iran says will declare 'prohibited zone' near Hormuz strait in coming days

New mobile immigration service at Dubai airport clears travellers in 12 seconds

UAE latest flight updates: Several flights cancelled or delayed

Israeli strikes on southern Lebanese town kill 12 as fears of escalation mount

Dubai home prices fall for first time in 5.5 years as market enters mature cycle

 

Gold had leapt over 4% on Wednesday, while the U.S. dollar and bond yields dropped sharply after the Treasury's announcement it would increase buybacks of longer-dated bonds.

U.S. gold futures edged 0.5% higher to $4,566.40.

"Gold has come under routine profit-taking pressure following the previous session's strong gains," said Jim Wyckoff, a market analyst at American Gold Exchange.

The somewhat hawkish U.S. Federal Reserve minutes and higher oil prices, which have revived inflation concerns, also undermined the metal, he added.

It pared some losses after Treasury Secretary Scott Bessent said in a CNBC interview on Thursday that the government might increase repurchase of Treasury bonds, which could be more than $4 billion per issue.

Although investors often regard gold as a safeguard against inflation, higher interest rates can curb demand by increasing the opportunity cost of holding a non-yielding asset.

Minutes from the Fed's July meeting released on Wednesday highlighted some policymakers' concerns about inflation and showed that several officials remained open to further rate hikes.

Traders have priced in a 67.4% chance of a Fed hold in September, according to the CME FedWatch Tool.

Oil prices extended their rally to a three-week high as stalled talks over the Iran conflict sustained market concerns about Middle East supply disruptions.

"With our U.S. economists expecting the Fed to remain on hold, we see scope for gold to exceed $5,000/oz in 2027, potentially earlier," but with scope for volatility too, Morgan Stanley analysts said in a note.

Among other metals, spot silver rose 1.8% to $68.10 per ounce, platinum gained 0.3% to $1,830.28 and palladium edged 0.1% lower to $1,331.07.