PRECIOUS-Gold off 1-month lows as investors assess economic stress

Summary:

• Focus on Powell's speech at Jackson Hole this week
• Weaker German, French data compound energy and euro woes
• Gold holding above $1,729 is a positive sign, says analyst

Gold prices on Tuesday edged higher from a near one-month low in the previous session, as investors were caught between worries of a recession and hawkish central bank views ahead of the Jackson Hole conference this week.

Having slipped in the last six sessions, spot gold <XAU=> rose 0.2% to $1,739.20 per ounce by 0936 GMT. Prices had dipped to $1,727.01 on Monday, their lowest since July 27.

US gold futures <GCv1> also edged 0.2% higher to $1,752.00.

US Federal Reserve Chair Jerome Powell will address the annual global central banking conference in Jackson Hole, Wyoming on Friday, a highly anticipated speech that could signal how high US interest rates will go to tame surging inflation.

"Gold's ability to hold above the key support level of $1,729 has helped attract some bit of fresh buying, but the market will remain quite nervous ahead of Jackson Hole," said Ole Hansen, head of commodity strategy at Saxo Bank.

Weakening economies in Germany and France piled more pressure on markets as decades-high inflation and surging gas prices drag Europe towards recession, pushing the euro to a 20-year low against the dollar. [MKTS/GLOB]

"(Therefore), investors will obviously be watching for further developments in the dollar and the situation in Europe where the economic outlook continues to deteriorate with these punitively high costs of energy," Hansen said, adding gold is still holding on to its inflation hedge status.

While gold is seen as a hedge against rising inflation, higher interest rates increase the opportunity cost of holding zero-yield bullion. [USD/]

"A meaningful dovish Federal Reserve pivot remains some way off despite the potential peak in US headline inflation. Hence, expect higher real US interest rates and a stronger US dollar to suppress investors' appetite for gold," said Giovanni Staunovo, analyst at UBS.

Elsewhere, spot silver <XAG=> eased 0.1% to $18.99 per ounce, and platinum <XPT=> fell 0.3% to $873.55.

Palladium <XPD=> rose 0.6% to $2,008.68.