By Barani Krishnan
Investing.com -- Gold perked for a third straight day on Thursday as the dollar wilted on the eve of the Federal Reserve’s annual gathering in Jackson Hole , Wyoming, where central bank chief Jerome Powell was expected to deliver a pivotal speech on rate hike expectations.
The benchmark gold futures contract on New York’s Comex, December , settled at $1,771.40 per ounce, up $9.90, or 0.6%. In two prior sessions, December gold rose almost 0.9%.
The spot price of bullion , more closely followed than futures by some traders, was at $1,757.63 by 16:12 ET (20:12 GMT), up 0.4% on the day. Like futures, spot gold was also up some 0.9% over two previous sessions.
“Gold got a limited boost as the dollar softened ahead of Fed Chair Powell’s speech at Jackson Hole,” Ed Moya, analyst at online trading platform OANDA, said in a commentary.
“Another round of US economic data and Fed speak supported the idea that the Fed will remain aggressive tightening policy until inflation is under control. Investors want to see if Fed Chair Powell locks the Fed in for another massive 75 basis point rate increase in September, but he will likely stick to the data-dependency script and leave it up to the September 13th inflation report.”
A rate hike in principle is bearish for gold, regardless of whether it’s modest or aggressive. But the yellow metal has been able to withstand the worst of selling pressure during this year’s Fed rate hikes due to its standing as an inflation hedge.
The Fed has carried out four rate hikes since March, bringing key lending rates from nearly zero to as high as 2.5% by July .
Inflation , as measured by the Consumer Price Index, or CPI, however, remains at more than four times the central bank’s annual target of 2%. The CPI grew at 8.5% during the year to July. Prior to that, the CPI expanded at its fastest pace in four decades, growing 9.1% during the year to June.
Data supportive of more aggressive Fed action on Thursday came in the form of the Commerce Department’s latest reading on the U.S. economy for the second quarter.
The latest estimate for U.S.
Gross Domestic Product
in the second quarter of 2022 has improved slightly to a negative 0.6% from a previously negative 0.9%, even as the economy remained in a recession, the Commerce Department said.
There are three estimates released altogether on the GDP for each quarter.
In the first quarter, the U.S. economy contracted by 1.6% in the first quarter of 2022. Conventionally, two straight quarters of GDP decline places an economy in a recession.
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