Gold hits one-week high as dollar dips; Jackson Hole symposium in focus

By Eileen Soreng

(Reuters) - Gold prices hit a one-week high on Thursday, buoyed by a weaker dollar, while investors awaited direction on rate hikes by the U.S. Federal Reserve from a key central bankers' meet this week.

Spot gold was up 0.6% at $1,761.68 per ounce, as of 0747 GMT, after hitting a peak since Aug. 18. U.S. gold futures were up 0.8% at $1,775.40.

The dollar dipped 0.3%, making gold less expensive for buyers holding other currencies. Benchmark U.S. 10-year Treasury yields were off multi-week highs hit in the previous session.

Investors across financial markets are bracing for the U.S. central bank to reiterate its commitment to tame inflation or signal a "pivot" to subdued interest rate hikes. Powell will address the annual global central banking conference at Jackson Hole on Friday.

"Will the Fed still be looking at aggressively increasing interest rates and affecting the economy and whether that will be on the back-burner for now ... People want to have clarity on this," said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

Monetary policy will be the key factor in the short-term for the gold market, with higher interest rates affecting consumer behaviour, Lan added.

Rate hikes increase the opportunity cost of holding bullion, which pays no interest, while boosting the greenback.

The Fed has raised its benchmark overnight interest rate by 225 basis points in total since March to fight sky-high inflation and indicated that further tightening would depend on economic data.

"After the Jackson Hole meet, I am expecting gold to shoot up by at least $40-$50," said Kunal Shah, head of research at Mumbai-based Nirmal Bang Securities.

The weak housing market, lower labour participation rates and economic uncertainties make a strong case for investors to go long on gold, Shah added.

Spot silver gained 0.9% to $19.34 per ounce, platinum rose 0.7% to $882.88 and palladium climbed 1.7% to $2,067.69.

 

(Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)