Gold prices hit one-year peak as US markets slump amid recession fear

Gold prices yesterday touched their highest level in a year, while US markets slumped amid revived fears that the world’s largest economy is heading towards a recession.

Spot gold was up 0.2 per cent at $2,024.69 an ounce at 6.09pm UAE time, while US gold futures rose 0.1 per cent to $2,040.90.

US stocks were lower and benchmark Treasury yields also softened. The Nasdaq joined the S&P 500 in the red, defensive stocks helped buoy the Dow into positive territory, while 10-year Treasury yields extended their decline, touching levels last seen in September.

Markets reacted after economic indicators suggested that economic cracks are beginning to show in the US.

Its service sector expanded at a much slower pace than projected last month on weaker new orders growth and softer business activity.

Companies added fewer jobs than forecast, while wage growth slowed.

Private payrolls rose by 145,000 last month after an upwardly revised 261,000 increase in February, according to ADP Research Institute and Stanford Digital Economy Lab.

Together, the data suggests that monetary tightening is having its intended effect of reining in inflation.

“Financial markets continue to respond to the deteriorating data on the US economy,” said Wael Makarem, senior market strategist for Mena at brokers Exness.

“The latter is creating a mixed sentiment among traders. A slowing economy could at the same time push the Federal Reserve towards a softer stance but also hurt company earnings and demand for commodities.”

The dollar rose against most developed currencies except the Japanese yen.

Meanwhile, oil prices inched lower in spite of plans by Opec+ producers to cut oil output.

Brent, the benchmark for two thirds of the world’s oil, was down 0.64 per cent at $84.86 a barrel at 7.30pm UAE time, while West Texas Intermediate was 0.92 per cent lower at $79.97.