Gold prices edged higher as a weaker US dollar supported demand while investors awaited key inflation data that could influence the Federal Reserve’s interest rate outlook.
Gold prices edged higher in global markets on Thursday, ending a recent decline as a weaker US dollar supported the precious metal while investors awaited key US inflation data for clues about the Federal Reserve’s next interest rate decision.
According to Reuters, spot gold rose 0.3% to $4,410.28 per ounce, while US gold futures for December delivery fell 0.1% to $4,457.20 per ounce.
Weaker dollar supports gold
Analysts said the decline in the US dollar helped provide support to gold prices. Since gold is priced in dollars, a weaker US currency can make the metal relatively cheaper for investors holding other currencies, potentially increasing demand.
Marex analyst Edward Meir said geopolitical tensions in the Persian Gulf were currently a secondary factor for gold, while the weaker US dollar was providing more significant support to the precious metal.
Meir said the dollar had failed to strengthen significantly despite higher US interest rates, helping maintain support for gold in international markets.
US inflation data in focus
Investors are now closely watching fresh US inflation figures, which could provide important signals about the Federal Reserve’s future monetary policy.
The US Producer Price Index (PPI) is due on Thursday, followed by the Consumer Price Index (CPI) on Friday.
Markets are looking to the data for indications about the direction of inflation and the potential path of US interest rates. Signs of easing inflation could strengthen expectations for lower interest rates, a development generally considered supportive for gold.
Fed rate decision draws attention
According to a recent Reuters poll of economists, a majority expect the Federal Reserve to keep interest rates at their current level at its Sept. 15-16 meeting.
Most economists surveyed also expect the US central bank to make no further rate increases during the remainder of the year.
Because interest rates can influence the attractiveness of non-yielding assets such as gold, investors are closely monitoring both US economic data and the Federal Reserve’s policy outlook.
US debt exceeds $40 trillion
Daniel Hynes, senior commodities strategist at ANZ, said growing US fiscal pressures were also providing support to gold.
He said continued growth in US government debt could increase investor concerns about the country’s fiscal position and the long-term value of the US currency, potentially encouraging greater interest in assets such as gold.
The US government’s total debt surpassed $40 trillion for the first time last month, renewing discussion about the country’s fiscal position and long-term debt burden.
Other precious metals
Other precious metals recorded mixed moves.
Spot silver rose 0.3% to $67.50 per ounce, while platinum fell 0.4% to $1,888.05 per ounce. Palladium gained 0.2% to $1,356.20 per ounce.
With gold prices recovering modestly, investors are now awaiting the latest US inflation data and the Federal Reserve’s interest rate outlook for indications of the precious metal’s next market direction.
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