Gold prices rose about 1% to a three-week peak on Tuesday, as the dollar and U.S. Treasury yields retreated, with investors hoping the U.S. Federal Reserve could adopt a less aggressive approach to rate hikes.
Spot gold gained 0.9% at $1,713.80 per ounce by 10:02 a.m. EDT (1402 GMT), its highest since Sept. 13.
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U.S. gold futures climbed 1.2% to $1,722.90.
Benchmark U.S. 10-year Treasury yields fell to a near two-week low, while the dollar extended its decline, making gold cheaper for other currency holders.
“The market is kind of pricing in that the Fed is going to back off here a little bit and that’s why you’re seeing this move back up in gold and silver,” said Bob Haberkorn, senior market strategist at RJO Futures.
The U.S. central bank has raised rates aggressively since March and its officials have signaled that more rate hikes are needed to tame inflation.
Looking ahead, U.S. non-farm payrolls’ data due on Friday could offer more clarity on the Fed’s policy tightening.
“If the jobs data comes out weaker-than-expected, gold will rally. If it comes out much stronger, the market might interpret that as well, the Fed can keep going here with rates,” Haberkorn added.
Gold registered on Monday its biggest daily percentage gain since March. However, rising U.S. rates increase the opportunity cost of holding zero-yield bullion.
“Gold is not out of the woods yet, but at least we’ve seen a very strong rebound. The first move has been driven by short covering,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Spot silver rose 1% to $20.97 per ounce, a more than three-month high. Prices jumped more than 9% in the previous session to record their best day in 14 years.
Platinum gained 2% to $920.17, and palladium climbed 4.3% to a five-month high of $2,316.56. (Reporting by Bharat Govind Gautam and Brijesh Patel in Bengaluru; editing by Uttaresh.V)