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(Bloomberg) — Gold extended a rebound after a speech by US Federal Reserve Chairman Kevin Warsh dampened speculation the central bank may hike interest rates this year to tackle inflation.
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Bullion rose as much as 0.9% to trade around $4,066 an ounce after closing up 0.6% the previous session, snapping two days of declines. Warsh’s less-hawkish-than-feared comments to the European Central Bank forum in Portugal on Wednesday eased concerns about the Fed’s next moves after the Iran war pushed up energy prices and inflation indicators. Higher borrowing costs are a headwind for non-yielding metals.
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Warsh also doubled down on a message from his first press conference as Fed chairman last month that the central bank will deliver price stability, and repeated his determination to bring inflation back to its 2% target.
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The sentiment “remained a net positive” for gold, said Ahmad Assiri, an analyst at Pepperstone Group Ltd. However, he noted the dollar remains relatively high and Treasury yields have recovered most of their earlier losses, showing that “the market still can’t put a finger on Warsh’s outlook, as he refuses to provide a forward guidance.”
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Latest data paints a mixed picture of the US economy. Manufacturing activity expanded for a sixth straight month in June but at a slower pace. Meanwhile, private-sector job creation was solid, capping the best three-month stretch for hiring in more than a year. Payrolls data due Thursday will provide further clues.
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Spot gold was 0.5% higher at $4,052.03 an ounce as of 9:38 a.m. in Singapore. Silver rose 1% to $59.74 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed.
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