Gold’s relief rally fizzles as dollar firms on recession risks

Gold prices retreated on Thursday as the U.S. dollar firmed on concerns that rising interest rates would spark a global recession, making greenback-priced bullion more expensive for overseas buyers.

FUNDAMENTALS


* Spot gold was down 0.2% at $1,656.59 per ounce, as of 0142 GMT. In the previous session, bullion rose as much as 2%.

* U.S. gold futures dipped 0.2% to $1,667.10.

* The dollar index was up 0.2%, although the unit retreated from a two-decade peak overnight as the sterling rallied following the Bank of England’s purchase of UK government bonds to restore financial stability in markets.

* The lack of clear progress on inflation means the U.S. central bank needs “moderately restrictive” interest rates that should reach a level between 4.25% and 4.50% by the end of this year, Atlanta Fed President Raphael Bostic said on Wednesday.

* Gold prices have fallen 20% since scaling above the key $2,000 per ounce level in March, as rapid U.S. monetary tightening made non-yielding gold less attractive and boosted the dollar to multi-year peak.

* The U.S. trade deficit in goods narrowed for a fifth straight month in August amid a decline in imports, which is being driven by slowing domestic demand as the Federal Reserve aggressively tightens monetary policy to tame inflation.

* World Bank President David Malpass warned on Wednesday that it could take years for global energy production to diversify away from Russia, prolonging the risk of stagflation, or a period of low growth and high inflation.

* Spot silver fell 0.4% to $18.82 per ounce, platinum

was down 0.6% at $858.54 and palladium dropped 1% to $2,134.52.

DATA/EVENTS (GMT)


0900 EU Consumer Confid. Final Sept

1200 Germany CPI Prelim YY Sept

1200 Germany HICP Prelim YY Sept

1230 US GDP Final Q2

1230 US Initial Jobless Clm Weekly