Gold gains as US dollar, yields stumble on Fitch downgrade

GOLD prices edged higher on Wednesday (Aug 2) as the US dollar and Treasury yields were bogged down after Fitch downgraded the country’s credit rating, souring confidence in the economy ahead of key data due this week.

Spot gold was up 0.2 per cent at US$1,948.43 per ounce by 0122 GMT, while US gold futures rose 0.3 per cent to US$1,985.60.

The US dollar index and benchmark 10-year Treasury yields dropped after rating agency Fitch downgraded the US government’s top credit rating, citing fiscal deterioration over the next three years and growing general government debt burden.

Gold, which is priced in US dollars, is a favoured safe-haven investment in times of stress and economic uncertainty.

US central bankers expressed hope they can beat inflation without cratering the job market, though they also said doing so will require keeping rates high for some time.

Global factory activity remained in a slump in July, private surveys showed on Tuesday, a sign slowing growth and weakness in China were taking a toll on the world economy, though the picture in the Americas was notably less bleak than elsewhere.

US job openings fell to the lowest level in more than two years in June, but remained at levels consistent with tight labour market conditions.

China’s currency regulators are asking some commercial banks to reduce or postpone their purchases of US dollars in order to slow the yuan’s depreciation, two people with direct knowledge of the matter said.

Global gold demand excluding over-the-counter trading fell 2 per cent year-on-year in the second quarter of 2023 as central banks slowed their purchases and consumption by the technology sector remained soft, the World Gold Council (WGC) said on Tuesday.

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Gold subdued on US dollar strength as markets await economic data

India’s gold demand in 2023 could fall 10 per cent year-on-year to their lowest in three years, as per the WGC.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.4 per cent on Tuesday.

Spot silver added 0.2 per cent to US$24.37, platinum held steady at US$931.01, and palladium rose 0.5 per cent to US$1,246.49. REUTERS