Gold prices climbed toward a 10-week high as investors reduced expectations of a near-term US rate hike and awaited fresh inflation data.
Gold prices advanced on Wednesday, moving closer to a 10-week high as investors reassessed the outlook for US interest rates ahead of key inflation data that could influence the Federal Reserve’s next policy decision.
Spot gold rose 0.6% to $4,391.82 an ounce by 0535 GMT, while US gold futures for December delivery gained 0.2% to $4,451.90. Bullion had touched a 10-week high on Tuesday before encountering technical resistance near its 100-day moving average around $4,387.
Analysts said expectations of fewer Federal Reserve rate hikes have been a major factor supporting gold. Kelvin Wong, senior market analyst at Oanda, said reduced expectations for rate increases were driving the market, while a break above the $4,200 level had also strengthened bullish momentum.
Gold recorded its strongest weekly gain since January last week after weaker-than-expected US jobs data prompted traders to reduce bets on higher interest rates. According to the CME FedWatch Tool, markets were pricing in a 50% chance of a September rate hike, compared with 60% before the jobs report.
Gold generally benefits from lower interest rates because the precious metal does not pay interest, making it relatively more attractive when yields decline.
Investors are now focused on the US Consumer Price Index report, due later Wednesday. The inflation figures could significantly alter expectations for the Federal Reserve’s policy path.
Other precious metals also gained. Spot silver rose 0.8% to $65.20 an ounce, while platinum increased 0.2% to $1,748.03 and palladium climbed 0.8% to $1,370.75.
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