Gold gains to one-year high as economic concerns grow

Gold rose to a more than one-year high on Thursday as more weak U.S. economic readings bolstered bets for a pause in interest rate hikes, with prospects of a mild recession also sending investors scurrying for the safe-haven metal.

Spot gold was up 1.3% to $2,040.10 per ounce by 9:31 a.m. EDT (1331 GMT), its highest since March 2022 and about $32 off record highs hit in 2020. U.S. gold futures gained 1.5% to $2,054.90.

Treasury yields slipped while the dollar slid after data showed a moderation in the rise in producer prices last month and an uptick in jobless claims, suggesting the Federal Reserve‘s aggressive tightening over the past year was taking a toll on the economy. [US/][USD/]

Further, U.S. consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering.

“That’s an underlying positive environment for gold where the Fed is done with their interest rate hike cycle, yet inflation overall remains higher than they would like,” said David Meger, director of metals trading at High Ridge Futures.

This comes after U.S. Fed minutes on Wednesday indicated that several policymakers considered pausing rate increases and projected that recent banking sector stress would tip the economy into recession.

Safe haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift the appeal of the zero-yield asset. But while gold is likely to remain bid with traders nervous about an economic recession and an extension of the banking crisis, it is likely to remain prone to profit taking on the highs, said independent analyst Ross Norman.

Spot silver was up 1.2% at a one-year high of $25.78. Platinum jumped 1.9% to $1,034.49 and palladium was up 0.7% to $1,469.97.