Gold prices remained close to the $4,400 mark on Thursday as investors waited for fresh US inflation data that could influence expectations around the Federal Reserve’s next interest-rate decision.
Spot gold rose 0.4% to $4,418.87 an ounce at 2:40 am ET, while US gold futures were up 0.03% at $4,461.82 an ounce. The precious metal has received some support from a weaker US dollar, although higher Treasury yields have limited its gains.
The US Dollar Index slipped to 98.74. Since gold is priced in dollars, a weaker US currency generally makes the metal more attractive to investors holding other currencies.
Markets are now closely watching US inflation figures because they could provide clues about the Federal Reserve’s approach to interest rates. The Producer Price Index (PPI) is due on Thursday, followed by the Consumer Price Index (CPI) on Friday.
A higher-than-expected inflation reading could strengthen expectations that the Federal Reserve may maintain a tighter monetary policy. On the other hand, softer inflation could increase expectations of easier monetary policy and potentially provide further support to gold.
US Treasury yields are another factor influencing the gold market. The yield on 10-year US Treasury bonds rose after the government announced plans to purchase up to $6 billion of longer-dated debt. Higher bond yields can make gold less attractive because the precious metal does not provide regular interest income.
Oil prices are also adding to inflation concerns. Brent crude recently reached $100 a barrel, its highest level since July. Rising energy prices can increase costs for businesses and consumers and potentially add to overall inflation.
Geopolitical tensions are providing another layer of support for gold, which is traditionally viewed as a safe-haven asset during periods of uncertainty. The ongoing conflict in the Middle East has kept investors cautious, with Iran warning that it is prepared for a more intense confrontation if US attacks on its territory and infrastructure continue.
Market expectations for US interest rates are also playing an important role. Swaps markets were indicating around a 65% probability of an interest-rate increase this month, according to the information cited in the report.
IG senior market analyst Tony Sycamore said the weaker dollar had helped support gold despite rising Treasury yields. Gold had ended the previous session around $4,402.
For now, gold traders are waiting for the latest inflation figures to determine the next major direction for the metal. A combination of dollar movements, bond yields, oil prices, geopolitical developments and Federal Reserve policy expectations is likely to keep gold prices volatile in the near term.
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