Gold prices rose slightly on Thursday, with the market’s focus on key US inflation data that could offer clues about the Federal Reserve’s next interest rate move.
Spot gold rose 0.3% to $2,303.80 an ounce around 0816 GMT, after falling to its lowest level since June 10 on Wednesday.
US gold futures rose 0.1% to $2,314.40.
The dollar index weakened 0.1% after hitting nearly two-month highs in the previous session. A weaker dollar makes gold more attractive to holders of other currencies.
“Gold is finding support from the US dollar’s moderation, and traders are also aware that dips below $2,300 since April have so far proven short-lived,” said Han Tan, chief market analyst at Exinity Group.
“If the prospects for Federal Reserve rate cuts by the end of 2024 fade further, gold bulls could end up giving up their attempt to sustain the bullion above the psychological level of $2,300.”
Traders are currently pricing the probability of a rate cut in September at around 62%, according to CME’s FedWatch tool.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Fed Governor Michelle Bowman on Wednesday reiterated her baseline view that “inflation will continue to decline if the official interest rate is maintained.”
Data expected for the week includes first-quarter US gross domestic product estimates, expected at 1230 GMT, and personal consumption expenditure (PCE) inflation data for Friday.
“Gold prices remain entangled in a tug-of-war between a less dovish Fed and high levels of geopolitical tension,” BMI analysts noted in a note dated Wednesday.
In the Middle East, cross-border tensions between Israel and Lebanon’s Hezbollah have escalated in recent weeks, fueling fears of an all-out Israel-Hezbollah war that could draw in other regional powers.
Spot platinum fell 0.6% to $1,004.60, palladium lost 0.7% to $922.25, while silver gained 0.1% to $28.79.
