Gold Futures Settle At 5-week High As Dollar, Bond Yields Drop

Gold prices rose sharply on Thursday, lifting the most active gold futures contract to a five-week closing high.

Rising fears about a possible recession in the U.S., a weak dollar and lower bond yields pushed up the demand for the safe-haven yellow metal.

U.S. Treasury yields dropped after San Francisco Fed President Mary Daly said that it would be reasonable for the Fed to raise rates interest rates by 50 basis points at the next meeting in September.

The dollar index dropped to 105.82, down 0.65% from the previous close.

Gold futures for December ended higher by $30.50 or about 1.7% at $1,806.90 an ounce, the highest settlement since June 30.

Silver futures for September ended up by $0.228 at $20.122 an ounce, while Copper futures for September settled at $3.4815 per pound, gaining $0.0145.

Traders looked ahead to the Labor Department's jobs data, due on Friday. The report is expected to show employment increased by 250,000 jobs in July after jumping by 372,000 jobs in June. The unemployment rate is expected to hold at 3.6%.

The strength of the jobs report could impact the outlook for interest rates, although the Federal Reserve will have much more data to digest before their next meeting in September.

Data released by the Labor Department today showed initial jobless claims crept up to 260,000 in the week ended July 30th, an increase of 6,000 from the previous week's revised level of 254,000. Economists had expected jobless claims to inch up to 259,000 from the 256,000 originally reported for the previous week.

A separate report from the Commerce Department showed the trade deficit narrowed to $79.6 billion in June from a revised $84.9 billion in May. Economists had expected the trade deficit to shrink to $81.9 billion from the $85.5 billion originally reported for the previous month.

The decrease in the size of the trade deficit came as the value of exports surged by 1.7 percent to $260.8 billion, while the value of imports edged down by 0.3 percent to $340.4 billion.

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