Gold continued its recovery after a speech by US Federal Reserve Chairman Kevin Warsh eased speculation that the central bank might raise interest rates this year to combat inflation.
The precious metal rose as much as 0.9% to trade around $4,066 an ounce, after closing 0.6% higher in the previous session, ending two days of declines.
Warsh's comments at the European Central Bank forum in Portugal on Wednesday, which were less hawkish than feared, eased concerns about the Federal Reserve's next steps after the Iran war pushed up energy prices and inflation indicators. Higher borrowing costs are putting pressure on non-yielding metals.
Warsh also reiterated a message he made at his first press conference as Federal Reserve chairman last month, that the central bank would achieve price stability, and repeated his determination to bring inflation back to its 2% target.
Mixed US data charts gold's course
Ahmad Assiri, an analyst at Pepperstone Group, said sentiment remained generally positive for gold. However, he noted that the dollar remained relatively high and Treasury yields had recovered most of their earlier losses, indicating that the market was still unable to gauge expectations, as Warsh declined to provide forward guidance.
The latest data paints a mixed picture of the US economy. Manufacturing activity expanded for the sixth consecutive month in June, but at a slower pace. Meanwhile, private-sector job creation was strong, capping the best three-month period of employment in over a year. The jobs report due on Thursday will provide further insights.
Spot gold rose 0.5% to $4,052.03 an ounce by 9:38 a.m. in Singapore. Silver climbed 1% to $59.74 an ounce. Platinum and palladium also advanced, while the Bloomberg Dollar Index, a measure of the U.S. currency, was little changed.
