Gold prices drifted higher on Thursday as so-called dollar debasement fears lingered, while attention shifted to highly anticipated remarks from US Federal Reserve Chair Kevin Warsh this week.
Spot gold was up 0.4% at $4,611.16 per ounce by 0630 GMT. US gold futures rose 0.3% to $4,664.50, Reuters reported.
The dollar-debasement narrative, coupled with concerns about the US budget deficit, remains supportive of gold in the medium term, said Kelvin Wong, a senior market analyst at OANDA.
Gold prices rose over 5% last week after the US Treasury's move to expand buybacks of older long-dated bonds, which renewed dollar-debasement fears.
Warsh's remarks at the annual Jackson Hole symposium in Wyoming on Friday are expected to be closely watched for further direction.
"The market is awaiting the speech for greater clarity on how the Fed will navigate the current economic landscape. If he does not provide specific forward-looking monetary policy guidance, current market pricing for rate hikes is likely to remain largely unchanged," Wong said.
Markets see a 36.1% probability of a September US rate hike and a 72.1% chance by December, according to the CME FedWatch Tool.
Data on Wednesday showed that annual US inflation held steady in July, well above the Fed's 2% target, and the unexpected pause in the decline from a recent Iran war-induced peak is likely to intensify the central bank's debate over whether rates should be lifted or held steady. On the geopolitical front, Qatar's prime minister will visit Tehran to relaunch diplomacy after the US and Iran traded recriminations over Washington's promise to increase economic pressure on Tehran.
Gold is considered a hedge against geopolitical and economic risks, but higher interest rates can diminish its appeal as it pays no interest.
"The $4,700 area remains an important short-term barrier. Gold may need to consolidate within the $4,500–$4,700 range before developing fresh momentum," said Linh Tran, market analyst at XS.com.
Spot silver gained 1% to $68.77, platinum rose 0.5% to $1,837.48 and palladium firmed 0.1% to $1,329.81.
