Gold firms on softer dollar, inflation data and Mideast risks in focus
Gold prices firmed on Wednesday as the dollar remained muted, while renewed attacks between the U.S. and Iran and upcoming inflation data kept the focus on the interest-rate outlook.
Chalinee Thirasupa | Bloomberg | Getty Images
Gold prices firmed on Wednesday as the dollar remained muted, while renewed attacks between the U.S. and Iran and upcoming inflation data kept the focus on the interest-rate outlook.
Spot gold rose 0.4% at $4,372.19 per ounce, by 0230 GMT. U.S. gold futures lost 0.5% at $4,416.00.
The U.S. dollar remained subdued, making dollar-priced metals more affordable for holders of other currencies.
“In the gold market, there is a tug of war in the short term between the bulls and the bears. We may see this kind of movement until the end of this week, when the CPI report is released,” said Kelvin Wong, senior market analyst at OANDA.
“While expectations of a hawkish Fed weigh on gold, the dollar debasement trade and concerns about fiscal deficits remain supportive for prices.”
Markets are awaiting U.S. producer price index data due on Thursday, with consumer price index data set to follow on Friday.
The Middle East war intensified with Iranian-backed Houthis in Yemen launching strikes on several Saudi cities, further embroiling a U.S. ally in the conflict, while U.S. forces hit multiple Iranian oil tankers and Iran struck a U.S. base in Jordan.
Brent crude prices jumped for a fourth straight session. Rising crude prices tend to put upward pressure on inflation, as higher energy costs filter through the broader economy.
According to the CME FedWatch Tool, traders see about a 60% chance that the Federal Reserve will raise interest rates at its upcoming policy meeting.
Although gold is widely regarded as an inflation hedge, elevated rates weigh on the appeal of non-interest-bearing bullion.
“Precious metals face a near-term test, but another major selloff is unlikely,” said Kelly Xu, a commodities strategist at Alpine Macro.
“Physical market tightness remains a key issue, while structural supply deficits could persist amid inelastic mine production and ongoing demand from electrification, electronics and AI-related infrastructure, providing fundamental support for silver over the longer term.”
Spot silver gained 0.4% at $66.00, platinum rose 1% at $1,831.76 while palladium fell 0.3% to $1,344.69.
