Gold prices saw an increase on Wednesday as investors processed data indicating a rise in U.S. consumer prices last month, while also awaiting further clarity on U.S. President Donald Trump’s trade policy.
In Dubai, gold rates witnessed an increase, with 24-carat gold rising by AED1.50 to AED405.00. Meanwhile, 22-carat gold went up AED1.00 to AED375.00. Additionally, 21-carat gold saw a boost of AED1.50, reaching AED359.50, while 18-carat gold climbed AED1.25 to AED308.25.
Spot gold was up 0.4 percent at $3,334.12 per ounce as of 04:01 GMT (currently trading $3,339). U.S. gold futures edged 0.1 percent higher to $3,340.90 (currently trading at $3,345).Â
“Gold at this moment is consolidating with a slight downward bias, especially with a stronger dollar,” said Brian Lan, managing director at GoldSilver Central, Singapore, as quoted by Reuters.
“However, many countries are still negotiating with the U.S. on the tariffs. There are still a lot of uncertainties in the market and many are looking for safe havens.” Trump, on Saturday, threatened to impose a 30 percent tariff on imports from Mexico and the European Union starting on August 1. However, Trump indicated on Monday that he was open to further negotiations.
U.S. consumer prices increased in June by the most in five months, driven by higher costs for certain goods, suggesting that tariffs were beginning to impact inflation and potentially keeping the Federal Reserve on the sidelines until September. Following the data, Trump remarked that consumer prices were low and the Fed should reduce interest rates now.
The U.S. central bank will likely need to maintain current rates for a while longer to ensure inflation remains low amid upward pressure from the Trump administration’s tariffs, Dallas Fed Bank President Lorie Logan stated.
Market eyes U.S. Producer Price Index data
Gold, often viewed as a safe haven during economic uncertainties, typically performs well in a low-interest-rate environment. Market attention now shifts to the U.S. Producer Price Index data due at 12:30 GMT on Wednesday for additional insights. Keeping gold’s gains in check, the dollar and benchmark U.S. 10-year Treasury yields remained close to multi-week highs. The USD resumed its uptrend, benefiting from the rally in the 10-year benchmark U.S. Treasury bond yields following the acceleration in the U.S. Consumer Price Index (CPI) in June, moving away from the Federal Reserve’s 2 percent inflation target.
The June CPI rose by 0.3 percent on the month, pushing the 12-month inflation rate to 2.7 percent, which aligns with expectations. The core figures also increased by 0.2 percent over the month and 2.9 percent annually, though they fell short of estimates. The uptick in U.S. inflation strengthened bets for an extended pause by the Fed, with the likelihood of a September Fed rate cut decreasing to approximately 52 percent from nearly 60 percent before the data release, as per the CME Group’s FedWatch Tool. Hawkish Fed expectations combined with U.S. President Donald Trump’s announcement of a trade deal with Indonesia helped the USD maintain its strength, contributing to a fresh decline in the non-interest-bearing gold price.
Nvidia supports gold amid USD uptrend
The U.S. yields and the USD also mirrored the rise in Japanese government bond yields and the USD/JPY pair as Japan’s bond market and local currency faced significant challenges due to escalating fiscal and political concerns. However, America’s AI pioneer Nvidia, driven by headlines, moderated the USD uptrend, providing some support to the yellow metal.
In other markets, spot silver gained 0.3 percent to $37.82 per ounce. Platinum rose by 0.2 percent to $1,379.46, while palladium climbed 0.4 percent to $1,210.66.
Gold prices moved toward $3,350 during the early Asian session on Tuesday. The precious metal is gaining traction amid safe-haven demand following U.S. President Donald Trump’s threat of 100 percent tariffs on Russia. Market participants are closely monitoring the U.S. Consumer Price Index (CPI) inflation data expected later today. Late on Monday, Trump threatened to impose 100 percent tariffs on Russia unless President Vladimir Putin agrees to a deal to end the invasion of Ukraine within 50 days. The U.S. President noted that these tariffs would be secondary, although he did not offer further details. Geopolitical risks could elevate the gold price, a traditional safe-haven asset, in the near term.
