Gold Rises for a Third Day Ahead of the Jackson Hole Federal Reserve Meeting

Gold climbed for a third straight day on Thursday as the dollar dropped ahead of the Federal Reserve's annual meeting in Jackson Hole, Wyoming, where central bank chief Jerome Powell was set to make a major statement regarding the outlook for rate hikes.

The gold futures contract for December on the New York Comex increased $9.90, or 0.6%, to $1,771.40 per ounce. In the previous two sessions, December gold prices increased by over 0.9%.

At 16:12 ET (20:12 GMT), the spot price of bullion, which some traders watch more closely than futures, was $1,757.63, up 0.4% for the day. Similarly to futures, spot gold rose 0.9% over the previous two trading sessions.

"Gold saw a modest boost as the dollar dropped ahead of Fed Chair Powell's Jackson Hole speech," noted Ed Moya, an analyst with the online trading platform OANDA.

"Another wave of US economic statistics and Fed remarks indicated that the Fed will sustain an aggressive monetary tightening policy until inflation is under control. Investors want to know if Fed Chair Powell will commit to a September rate hike of 75 basis points, but he is expected to stick to the data-dependence script and postpone the September 13 inflation report.

The Dollar Index, which analyzes the U.S. dollar against the euro and five other major currencies, fell 0.2%.

Whether modest or vigorous, a rate hike is intrinsically adverse for gold. Gold's role as an inflation hedge has allowed it to withstand the most extreme selling pressure during this year's Fed rate increases.

Since March, the Fed has executed four rate hikes, bringing essential lending rates from near zero to as high as 2.5% by July.

As measured by the Consumer Price Index or CPI, inflation continues to exceed the annual target of 2% established by the central bank. Through July, the CPI had climbed by 8.5% year-to-date. Prior to that, the CPI rose at the fastest rate in four decades, 9.1% in the twelve months preceding June.

The Commerce Department provided the most recent assessment of the U.S. economy for the second quarter on Thursday, lending credence to more aggressive Fed action.

The latest projection for the U.S. Gross Domestic Product in the second quarter of 2022 has improved to a negative 0.6% from a negative 0.9%, despite the economy remaining in recession.

Each quarter, three GDP estimates are produced in total.

The United States GDP contracted by 1.6% in the first quarter of 2022. Conventionally, a recession consists of two consecutive quarters of GDP decrease.