Gold prices rose by nearly 1% on Wednesday, supported by declining expectations that the U.S. Federal Reserve will raise interest rates next month, as investors await key U.S. inflation data that could reshape expectations for monetary policy.
Spot gold rose 0.9% to $4,406.34 per ounce by 3:30 a.m. GMT, while U.S. gold futures for December delivery gained 0.6% to $4,466.70 per ounce.
Gold climbed to a 10-week high on Tuesday before encountering technical resistance at its 100-day moving average, around $4,387, and settled lower for the second time this month.
“The main driver for gold is the decline in expectations for a Federal Reserve rate hike,” said Kelvin Wong, senior market analyst at OANDA.
Gold posted its strongest weekly gain since January on Friday after weaker-than-expected employment data prompted traders to scale back bets on higher U.S. interest rates.
According to CME Group’s FedWatch Tool, traders now see a 50% probability of a rate hike in September, down from 60% before the jobs report.
Lower interest rates typically support gold, which does not generate interest income.
The U.S. Consumer Price Index (CPI) data, due later on Wednesday, could reshape expectations for the path of interest rates.
Oil prices also extended their gains after the United States and Iran-aligned Houthi forces in Yemen announced separate attacks on two vessels on Tuesday. Prospects for ending the war with Iran appeared bleak, as Tehran said the Strait of Hormuz would remain closed unless Washington accepted its conditions.
Among other precious metals, spot silver rose 1.2% to $65.46 per ounce, trading below the high reached on Tuesday, its highest level since June 22.
Platinum gained 0.6% to $1,754.10 per ounce, while palladium rose 0.8% to $1,370.86.
Reuters
