Gold holds near five-month low, focus turns to Jackson Hole

By Brijesh Patel

(Reuters) – Gold prices hovered near a five-month low on Tuesday as a stronger dollar and higher bond yields dented bullion’s appeal, while focus shifted to the Jackson Hole symposium due later this week for more cues on the interest rate outlook.

Spot gold was nearly unchanged at $1,896.60 an ounce by 1:43 p.m. EDT (1743 GMT), but still held near the low of $1,883.70 touched on Friday. U.S. gold futures settled 0.2% higher at $1,926.00.

Benchmark 10-year U.S. Treasury yields eased for the day. However, they were still near their 15-year high levels. [US/]

Meanwhile, limiting gold’s upside, the dollar rose 0.2%, making gold more expensive for holders of other currencies. [USD/]

Gold prices fell to their lowest level since March last week as strong U.S. economic data boosted bets that U.S. interest rates would stay higher for longer. Higher rates increase bond yields, making non-yielding bullion less attractive.

“The Fed is going to remain optimistic here and that’s probably going to support the argument that maybe the Fed will have to do more tightening,” said Edward Moya, senior market analyst of the Americas at OANDA.

Richmond Fed president Thomas Barkin said the U.S. central bank needs to defend the 2% inflation target to ensure its own credibility remains intact with the public.

On the technical front, gold prices are trading below the 50, 100 and 200-day moving averages. Speculators who trade on technical signals regard a break below such moving averages as a bearish sign.

Indicative of sentiment, receding fears of a U.S. slowdown and surging bond yields have gradually eroded the appeal of exchange-traded funds (ETF) backed by safe-haven gold. [GOL/ETF]

“Against this backdrop, gold will doubtless find it difficult to come out of the defensive in the near future. That said, sentiment is now already so bearish that it wouldn’t take much to spark a price recovery,” Commerzbank said in a note.

Spot silver rose 0.3% to $23.41 an ounce, while platinum gained 1.2% to $920.19. Palladium was up 1.1% at $1,258.34.

(Reporting by Brijesh Patel and Harshit Verma in Bengaluru; editing by Christina Fincher and Maju Samuel)