Aug 7 (Reuters) - Gold prices inched up on Wednesday driven by safe-haven demand and rising bets that the U.S. Federal Reserve might reduce interest rates as early as September, while a rebound in U.S. dollar and Treasury yields limited gains.
Spot gold rose 0.2% to $2,393.66 per ounce, as of 0936 GMT, having settled lower in the previous four sessions. U.S. gold futures gained 0.1% to $2,434.00.
Prices fell as much as 3% on Monday, caught in a global sell-off driven by fears of a U.S. recession.
"It's possible that some distressed sellers from the weekend/Monday will be looking to re-establish their positions as gold has done its usual job by providing liquidity ahead of potential margin calls," said StoneX analyst Rhona O'Connell.
The dollar index (.DXY), inched further away from a seven-month low touched on Monday and the 10-year U.S. Treasury yield also gained as fears that the U.S. economy is quickly entering a recession were seen as overdone.
Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low interest rate environment.
Traders have altered their rate cut expectations following the soft jobs report last week, with nearly 105 basis points of cuts anticipated by year-end and a 100% chance of a rate cut in September, according to the CME FedWatch Tool, opens new tab.
The outlook for looser monetary policy provides a supportive element for gold as a non-yield-bearing asset, and this factor has combined with strong central bank buying to deliver a positive performance for the yellow metal in 2024 so far, Kinesis Money said in a note.
Spot silver edged 0.2% lower to $26.972 per ounce,
The expected economic slowdown will dent industrial demand and that is likely to cap the upside for silver, said Ricardo Evangelista, senior analyst at ActivTrades.
Platinum rose 0.6% to $919.80 and palladium was up 1.2% to $884.97.
Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Emelia Sithole-Matarise
