Gold and silver futures rose sharply on Wednesday, driven by a retreat in U.S. bond yields and the U.S. dollar.
The benchmark 10-year U.S. Treasury yield slipped from near 16-year highs, while the dollar fell after weak U.S. PMI data.
Driven by this, the front-month Comex gold futures contract for August delivery closed up 1.2% at $1,918.50 an ounce, its fourth consecutive day of gains and its biggest one-day gain since July 18. The silver futures contract rose 4% to $24.363 an ounce, its fifth straight day of gains and its biggest daily gain since July 12.
Among precious metal mining stocks, Harmony Gold (HMY.US) closed up 14.37%, Hecla Mining (HL.US) rose 8.25%, Equinox Gold (EQX.US) rose 6.72%, Iamgold (IAG.US) rose 6.42% %, Centerra Gold (CGAU.US) rose 5.92%, and New Gold (NGD.US) rose 3.17%.
Earlier, the U.S. composite PMI index released by S&P Global showed that business activity in the U.S. was almost at a standstill in August, with the growth rate at the lowest level since February as demand for new business in the services sector shrank.
RJO Futures analyst Bob Haberkorn said gold was "a bit oversold" and that, helped by a slight dip in yields, the metal "rebounded on some bargain-hunting and subsequent short-covering."
However, gold is still down 2.5% this month due to the sharp rise in 10-year Treasury yields.
"Higher U.S. nominal and real yields reflect a repositioning of the U.S. economy from expectations for a 'hard landing' scenario to expectations for a 'soft landing' scenario," said analysts at ICICI Bank.