Can Gold Still Be Bought? Experts Identify the Key Factors After Its Rebound

Gold bounced from a one-month low on Wednesday as U.S. Treasury yields and the dollar retreated, prompting investors to reassess whether the precious metal still has room to rise.

Spot gold climbed 1.1% to $4,376.41 an ounce after touching an intraday level last seen on Aug. 7. December gold futures closed 0.4% higher at $4,414.00 an ounce.

David Meger, head of metals trading at High Ridge Futures, said falling Treasury yields helped gold recover from its recent low. He identified future energy-market movements and bond yields as key influences on the market.

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One reason gold was able to return above the flat line was the decline in Treasury yields, which allowed prices to rebound from their recent low. Future energy-market movements and yields are among the key factors affecting the gold market.

The retreat in long-term bond yields does not necessarily reflect inflation concerns, New York Federal Reserve President John Williams said. Instead, he attributed the rise in yields to the strength of the U.S. economic fundamentals.

Private-sector employment growth in August came in below market expectations, but gold showed little reaction. Investors are now waiting for Friday’s nonfarm payrolls report, which they see as a more important guide to the economy and the direction of interest rates. Rhona O’Connell, head of market analysis at StoneX, said the ADP figures are not highly reliable and that the payrolls report will matter more. CME FedWatch showed traders pricing in a 64% chance of a Federal Reserve rate hike at its September meeting. Silver, platinum and palladium also rose, with palladium gaining 3.2% to $1,352.74 an ounce.

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The reliability of the ADP data is not high. It may set the tone for the nonfarm payrolls report, but the payrolls data is unquestionably the most important indicator for the market.