Gold ekes out gains as recession fears mount, treasury yields retreat

Gold prices edged up on Thursday as growing recessions fears and a pull back in U.S. Treasury yields helped bullion overcome pressure from expectations of aggressive monetary tightening.

Spot gold rose 0.3% to $1,842.85 per ounce by 1411 GMT. U.S. gold futures inched 0.4% higher to $1,845.20.

Buoying gold's appeal, especially among overseas buyers, the dollar index pared some gains on data showing a dip U.S. weekly jobless claims last week as labor market conditions remained tight, though some slowing is emerging.

Meanwhile, U.S. business activity slowed considerably in June, a survey showed.

Gold is going to have some underlying support here due to the global recession fears, said Edward Moya, senior analyst with OANDA.

 

"In this current environment, there's still a lot of pessimism and hesitancy to pile into risky assets right now. So treasury yields might see downside and this is once again good news for gold."

U.S. yields fell to their lowest in almost two weeks. [US/]

But while gold is considered a hedge against inflation and economic uncertainties, rising interest rates reduce appeal for the asset, which pays no interest.

Fed Chairman Jerome Powell on Wednesday said the Fed is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if that risks an economic downturn.

Bank of China International analyst Xiao Fu said while gold will attract buying due to recession risks, the rising rates are very powerful in terms of impacting asset classes, including gold.

Spot silver rose 0.2% to $21.44 per ounce, platinum was down 0.5%, to $922.15. Palladium gained 0.4% to $1,870.46.

Silver bars have piled up at Russia's Polymetal as it seeks new export destinations to replace Europe. Polymetal, along with other Russian commodity producers, has been impacted by Western banks and shippers having reduced dealings with Russian companies.