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Gold Hovers Above $2,000 as Traders Assess Recession Risk

Gold Hovers Above $2,000 as Traders Assess Recession Risk
A worker displays gold bars stamped with the company signage at a gold and silver refinery operated by MMTC-PAMP India Pvt. Ltd., in Nuh, India, on Wednesday, Aug. 31, 2022. Gold held near its highest level in September 2022, as the dollar continued its retreat amid growing expectations that inflation may have peaked in the US. Photographer: Anindito Mukherjee/Bloomberg

Gold edged slightly higher, hovering above $2,000 an ounce with traders assessing the Federal Reserve’s interest-rate path following weaker-than-expected economic data from the US.

The US service sector expanded in March at a much slower pace than projected on considerably softer new orders growth and business activity. Companies added fewer jobs than forecast while wage growth slowed, underscoring labor demand that’s showing some signs of cooling. The dollar and Treasuries advanced in response as recession concerns resurfaced. That weighed on bullion as it’s priced in the greenback.

Still, the precious metals remains above the key level, suggesting continued demand from investors seeking safety on the back of elevated inflation, a weakening labor market, tight liquidity and brittle credit.

Bullion Eyes Record High Set in 2020 | Gold stays above $2,000 after softer US economic data

“We have always viewed gold as a hedge in a portfolio context, and its safe-haven qualities have shined through again during the latest market turbulence,” UBS Group AG strategists including Giovanni Staunovo said in a note. The analysts see bullion eventually breaking its previous record to test $2,200 an ounce by early 2024.

Spot gold was up less than 0.1% to $2,021.69 an ounce as of 11:56 a.m. in New York.

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