Gold regains some of its lustre with the decline of US dollar

Gold prices regained some momentum on Thursday as the dollar weakened, but the prospect of the Federal Reserve raising interest rates again kept investors on edge.

By 0333 GMT, spot gold rose 0.3 percent to $1,840.94 an ounce, after hitting its lowest level since early January on Wednesday. US gold futures rose 0.3 percent to $1,850.20.

High interest rates discourage investing in gold, which does not yield a return, although it is considered a hedge against rising prices.

Data on Wednesday showed retail sales in the United States rebounded in January after declining for two consecutive months, indicating the continued resilience of the economy despite higher borrowing costs.

Strong retail sales figures, along with data released on Tuesday showing continued high inflation in the US last month, reinforced fears that the Federal Reserve will keep interest rates high for longer.

A number of Federal Reserve policymakers indicated this week that more increases are needed to bring inflation down to the central bank’s 2 percent target.

The dollar index fell 0.3%, after reaching a six-week high on Wednesday, making gold priced in the US currency less expensive for buyers abroad.

The benchmark 10-year Treasury bond yields were the highest since January 3.

As for other precious metals, spot silver rose 0.7 percent to $21.77 an ounce. Platinum rose 0.6% to $920.16, and palladium rose 1% to $1,479.16.