Gold prices moved higher on Thursday, extending their recovery from a recent eight-month low.
However, gains remained limited as investors stayed cautious about the possibility of higher U.S. interest rates.
Gold Prices Recover From Eight-Month Low
Spot gold rose 0.3% to $4,043.23 per ounce by 20:40 ET, or 00:40 GMT.
Meanwhile, gold futures slipped 0.7% to $4,054.67 per ounce.
The precious metal attracted bargain hunters after recording its worst quarterly decline in 13 years during the June quarter.
Silver and Platinum Also Move Higher
Other precious metals also recovered following heavy losses during the previous quarter.
Spot silver climbed 1.3% to $59.8790 per ounce.
Spot platinum performed even better, rising 2.1% to $1,613.33 per ounce.
Federal Reserve Maintains Hawkish Tone
Federal Reserve Chair Kevin Warsh reinforced the central bank’s commitment to its 2% inflation target on Wednesday.
Warsh warned that investors expecting a rapid return to loose monetary policy could be disappointed.
However, he offered few details about the Federal Reserve’s next interest-rate decision.
He also noted that the inflation outlook had improved slightly since he took office.
Higher Interest-Rate Expectations Pressure Gold
Despite the improving inflation outlook, Warsh’s comments suggested that the Federal Reserve remains cautious about easing monetary policy.
This hawkish position has weighed heavily on gold prices in recent months.
His remarks also supported the U.S. dollar, which remained close to a 13-month high.
A stronger dollar can make gold more expensive for buyers using other currencies.
Markets Expect Another Fed Rate Increase
Investors are currently pricing in at least one Federal Reserve interest-rate increase during 2026.
Persistent U.S. inflation has strengthened expectations that borrowing costs may remain elevated.
Higher energy prices contributed to a sharp rise in inflation during the previous three months.
Although energy prices have since declined, investors remain concerned about other inflation risks, including rising semiconductor prices.
Why Higher Rates Hurt Gold Prices
Higher interest rates are generally negative for gold and other non-yielding assets.
Gold does not provide interest or dividend payments. Therefore, it can become less attractive when government bonds and savings products offer higher returns.
Concerns about tighter monetary policy have already pushed gold well below its January record high.
The decline has also erased the metal’s gains for the year.
Nonfarm Payrolls Report in Focus
Investors are now awaiting the June U.S. nonfarm payrolls report, due later on Thursday.
Employment and inflation are the Federal Reserve’s two main considerations when setting interest rates.
Economists expect the report to show slower job growth. However, nonfarm payrolls have exceeded expectations for the past three months.
A stronger labor market could give the Federal Reserve more room to raise interest rates.
Private Payroll Data Shows Weakness
Private-sector employment data released on Wednesday was weaker than expected for June.
The disappointing figures raised some concerns that the U.S. labor market may be losing momentum.
A weak nonfarm payrolls report could reduce expectations for higher interest rates and support gold prices.
However, another strong result could strengthen the dollar and place renewed pressure on precious metals.
Gold Traders Await the Next Catalyst
The U.S. jobs report could determine whether gold extends its recovery or returns toward recent lows.
Investors will also continue monitoring inflation, Federal Reserve statements, the U.S. dollar, and expectations for future interest-rate changes.
