Gold Futures Settle Sharply Higher

Gold prices climbed higher on Thursday amid expectations the dollar will likely lose ground in coming days after Fed Chair Jerome Powell hinted at a slowdown in the pace of rate hikes at future meetings.

After announcing another 75-bps rate hike at the end of a two-day policy meeting, Powell said the next move will depend on incoming data.

The Fed’s next monetary policy meeting is scheduled for September 20-21, with CME Group’s FedWatch tool currently indicating a 59.2 percent chance of a 50-basis point rate hike and a 36.7 percent chance of another 75-basis points rate hike.

The dollar index, which dropped to 106.06 in the Asian session, climbed to 106.98 in the European session, before paring gains and dropping to 106.45.

Gold futures for August ended higher by $31.20 or about 1.8% at $1,750.30 an ounce.

Silver futures for September ended up by $1.268 or 6.8% at $19.868 an ounce, while Copper futures for September settled at $3.4745 per pound, gaining $0.0445.

Data from U.S. Commerce Department showed a continued contraction in U.S. economic activity in the second quarter of 2022. The data said real gross domestic product decreased by 0.9% in the second quarter after slumping by 1.6% in the first quarter. Economists had expected GDP to increase by 0.5%.

With GDP unexpectedly declining for the second consecutive quarter, the data signals the U.S. economy is in a technical recession.

Meanwhile, a separate report from the Labor Department showed initial jobless claims edged down to 256,000 in the week ended July 23rd, a decrease of 5,000 from the previous week’s revised level of 261,000. Economists had expected jobless claims to inch up to 253,000 from the 251,000 originally reported for the previous week.

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