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Gold hits a two-week high as U.S. bond yields drop


Spot gold was 0.4% higher at $2,363.03 per ounce after reaching a two-week high earlier in the session

Gold prices reached a two-week high on Thursday as U.S. bond yields dropped on signs of a cooling labour market, strengthening a case for a September rate cut by the Fed, while investors positioned for U.S. non-farm payrolls data.

Spot gold was 0.4% higher at $2,363.03 per ounce as of 0858 GMT, after reaching a two-week high earlier in the session. It added 1% on Wednesday.

U.S. gold futures gained 0.3% to $2,381.80.

Gold is supported by expectations of a slowdown in the U.S. economy and a dovish central bank in the next few months, according to Kinesis Money market analyst Carlo Alberto De Casa.

I do not see another big rally because we already had one in the first part of the year. Yet the fact that gold is able to remain above $2,300 is something incredible, he added.

Benchmark 10-year U.S. Treasury yields were near their lowest in two months, after data this week suggested that the labour market is finally cooling.

Markets are now awaiting the non-farm payrolls data on Friday for further clues.

The Federal Reserve will likely reduce its key interest rate in September and once more this year, as per a majority of forecasters in a Reuters poll.

Lower rates reduce the opportunity cost of holding non-yielding bullion.

The only thing that could pressure gold at the moment is a revamp of inflation in the U.S., De Casa added.

Meanwhile, in wider financial markets, global stocks were on the verge of an all-time high and the euro gained ahead of what was widely expected to be the ECB’s first interest rate cut in around five years.

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