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Gold gains as dollar slips, focus shifts to Fed meet next week

by Mark Mendoza

Gold Rebounds from Three-Week Lows on Weaker Dollar and Positive Chinese Data

Gold prices bounced back from three-week lows on Friday, supported by a weaker dollar and better-than-expected Chinese economic data. The recovery was also driven by increased investor attention on the Federal Reserve’s upcoming guidance on interest rates.

Spot gold rose 0.4% to $1,917.60 per ounce by 1220 GMT, recovering from its lowest level since August 23 in the previous session. Meanwhile, U.S. gold futures gained 0.4% to $1,940.

The dollar experienced a slight retreat, slipping 0.1% against its rivals after reaching a six-month peak on Thursday. The weaker dollar made gold more affordable for holders of other currencies.

Chinese data showed that factory output and retail sales grew at a faster rate in August, boosting recovery hopes in the world’s top gold consumer. This positive news also benefitted other precious metals, with silver rising 2.2% to $23.13 per ounce, platinum gaining 1.1% to $916.29, and palladium increasing by 1% to reach $1,263.57. All three metals are set to achieve weekly gains.

Further attention is now focused on the upcoming Federal Reserve meeting, where interest rates are widely expected to remain unchanged. The expectation of rates remaining high for an extended period has been putting pressure on gold prices, according to market strategist Yeap Jun Rong.

Despite this pressure, gold has remained resilient and continues to hold above the $1,900 per ounce level. This indicates the continued interest and investor confidence in the precious metal, as highlighted by Carlo Alberto De Casa, an analyst at Kinesis Money.

In summary, gold prices have rebounded from recent lows, driven by a weaker dollar and positive Chinese economic data. While the Federal Reserve’s upcoming meeting is adding uncertainty to the market, gold has shown resilience and is holding above key price levels, suggesting enduring investor interest. As the week progresses, market participants will closely monitor the latest developments to gauge the future direction of gold prices.

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