Gold prices recover from two-month low as dollar rally stalls

Gold prices edged higher on Thursday as ‌the dollar eased from an 18-month peak, helping bullion recover from a two-month low, while traders weighed the prospect of another US Federal Reserve rate hike this year.

Spot gold was up 0.5% at $4,132.66 per ​ounce by 0140 GMT. On Wednesday, bullion prices touched their lowest level since August 5 as ​a firmer dollar and higher US Treasury yields weighed on the market.

US ⁠gold futures for December delivery gained 0.4% to $4,157.60.

The pullback in the dollar boosted demand for greenback-priced gold, making it cheaper for buyers using other currencies.

"The short-term investment case for ​gold remains challenged. For now, it remains a seller's market, and we would need to see a break above $4,275 to become more constructive on the near-term upside," said Chris Weston, head of ​research, Pepperstone.

"If markets begin treating rising long-end yields as a reflection of sovereign credit ​and fiscal risk rather than stronger economic fundamentals, gold could start to diverge positively from bond ‌yields ⁠and the debasement trade could return with greater force."

Fed policymakers were divided last month over the rationale for raising interest rates, with "some participants" seeing a hike as needed to keep the impact of energy and other price shocks at bay, but a more ​hawkish core viewing ​it as necessary to ⁠guard against emerging demand-driven inflation, minutes showed.

Traders see only an 18% chance of a rate hike later this month, but are pricing in an 80% likelihood of an increase in December, according to CME's FedWatch tool.

Higher rates diminish the appeal of non-yielding gold.

The global economy is under threat from persistently high energy prices, record public debt and risks from the AI investment boom, International Monetary Fund ⁠Managing ​Director Kristalina Georgieva warned, urging governments to implement protective ​fiscal and monetary policy measures.

Among other metals, spot silver rose 0.4% to $60.36, platinum added 1.8% to $1,660.05, and palladium ​climbed 1.6% to $1,142.00.

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