Gold rebounds from 1-week trough as recovery fears resurface

Gold prices rebounded from a 1-week low hit in the previous session after the U.S. Federal Reserve raised concerns that a recovery from the coronavirus-induced economic slump faced a highly uncertain path.

Spot gold was trading 1.02 percent higher at $1,949.30 per ounce by 0623 GMT, having declined more than 3.5 percent to hit a low of $1924.77 on Wednesday, its lowest since August 13. U.S. gold futures fell 0.7 percent to $1,956.70.

The minutes from Federal Reserve's last policy meeting showed policymakers considering tweaks to monetary policy that could result in the U.S. central bank sticking with aggressive stimulus measures far longer than under its previous rubric. The Fed also warned the economic downturn triggered by the COVID-19 pandemic faces a highly uncertain path and reiterated the need for additional fiscal stimulus.

For the Fed, the focus now shifts to whether more will be revealed at the Aug. 27-28 virtual Jackson Hole symposium or at September’s meeting.

Asian equities declined, weighed down by the U.S. Federal Reserve’s cautious view of the economy, tensions with China and new clusters of coronavirus infections.

Earlier in the day, China kept its benchmark lending rate for corporate and household loans steady as expected for the fourth straight month. The decision came after the People’s Bank of China injected more liquidity through its medium-term lending facility on Monday.

The greenback against a basket of currencies traded 0.05 percent up at 93.04, having touched a low of 92.13 on Tuesday, its lowest since May 2018. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.664 percent.

Markets await the U.S. weekly jobless claims data, which are expected to decline even further below one million, and also the Philadelphia Fed business index.