Gold ticks up as dollar eases before Fed’s July minutes

Gold clawed higher on Wednesday on a weaker dollar and bond yields, recovering some ground after retreating below the key $1,900 level in the last session following robust U.S. economic data.

Bullion traders also positioned for minutes from the Federal Reserve’s July policy meeting for further cues on interest rate strategy, as well as U.S. homebuilding and factory output data later in the day.

Spot gold edged up 0.2%, to $1,905.25 per ounce, while U.S. gold futures were up 0.1%, at 1,936.60.

Gold has found short-term support from a weaker dollar as the pound strengthened after data showed British core inflation stayed strong in July, said Quantitative Commodity Research analyst Peter Fertig.

Non-yielding gold, priced in dollars, also gained as benchmark 10-year Treasury yields retreated from near 10-month highs.

“Economic data out of the U.S. thus far has provided room for rates to be kept high for longer. We have the U.S. retail sales data yesterday pushing back against recession concerns and potentially keeping safe-haven flows at bay,” said Yeap Jun Rong, a market strategist at IG.

Gold fell to its weakest level since end-June after the data on Tuesday.

Indicating investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since January 2020. No inflows have been reported since late July.

Minneapolis Fed President Neel Kashkari on Tuesday said interest rates may still need to go higher to tame inflation.

“The main factor slowing gold’s decline is the lack of confidence in the health of the global economy with the latest data out of China adding to that negative sentiment,” Kinesis Money analyst Rupert Rowling said in a note.