Gold firms on softer dollar, inflation data and Mideast risks in focus
- Spot gold was up 0.6% at $4,381.32 per ounce
Gold prices firmed as a subdued dollar and escalating US-Iran tensions offset concerns about potential Fed rate hikes, with investors awaiting key US inflation data.
- Subdued US dollar making dollar-priced metals more affordable.
- Upcoming US inflation data and Federal Reserve interest rate outlook.
- Escalating US-Iran tensions and rising crude oil prices.
Gold prices firmed on Wednesday as the dollar remained subdued, while renewed US-Iran tensions and upcoming inflation data kept investors focused on the interest-rate outlook.
Spot gold was up 0.6% at $4,381.32 per ounce, by 0505 GMT.
US gold futures lost 0.3% to $4,424.70.
The US dollar remained muted, 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 US producer price index data due on Thursday, with consumer price index data set to follow on Friday.
Iran’s Revolutionary Guard said it fired ballistic missiles at a base in Jordan used by the US military and attacked 10 ships, after the US said it had destroyed five Iranian oil tankers, in a sharp escalation of the six-month-old war.
Brent crude prices jumped for a fourth consecutive 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 0.9% to $66.31, platinum rose 1.1% to $1,833.58, while palladium fell 0.1% to $1,347.82.
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