Gold prices climbed for a third consecutive session on Wednesday, reaching a two-week high as a weaker U.S. dollar and falling oil prices boosted demand, while investors looked ahead to key U.S. employment data for fresh signals on the Federal Reserve’s interest rate path.
Spot gold rose 1.4% to $4,143.83 an ounce, its highest level in two weeks, while U.S. gold futures gained 1% to $4,191.90 an ounce.
The U.S. dollar weakened further, making dollar-priced bullion more affordable for buyers using other currencies. At the same time, oil prices extended losses for a second straight session after a sharp decline earlier this week, easing concerns over inflation and reducing expectations that the Federal Reserve may need to keep borrowing costs higher for longer.
“Gold’s correlation with oil remains intact as oil prices have a significant impact on the global economy and inflationary pressures, and gold prices could rise further if there is a clear path to further easing tensions,” said Calvin Wong, senior market analyst at OANDA.
Investors are now focused on upcoming U.S. labour market data, which could provide further guidance on the central bank’s next policy move. Markets are currently pricing in a 59% probability of a rate increase at the Fed’s September 15-16 meeting, compared with a 67% chance a day earlier.
Gold, which does not offer interest or dividend income, tends to face headwinds in a high-interest-rate environment, although it continues to attract investors seeking protection against inflation and economic uncertainty.
Analysts at TD Securities said in a research note that they expect bullion to remain broadly range-bound near current levels in the near term.
Other precious metals also advanced, with silver rising 2% to $60.70 an ounce, platinum gaining 1% to $1,751.03, and palladium adding 0.5% to $1,360.25 an ounce.
