Gold prices rose on Wednesday as investors awaited the release of key U.S. inflation data for more insight into the size of the Federal Reserve’s potential interest rate cut next week.
In the UAE, gold prices rose AED1.25 with 24-carat gold rising to AED305 and 22-carat gold inching up to AED282.50. Meanwhile, 21-carat gold reached AED273.50 and 18-carat gold was at AED234.50.
Globally, spot gold gained 0.04 percent to $2,519.78 as of 5:02 GMT, gaining almost 17 percent in the last six months. Meanwhile, U.S. gold futures rose 0.21 percent to $2,548.50.
Softer inflation to further support bullion
Gold prices found support ahead of the release of U.S. inflation data. Analysts expect gold prices to hit a new high if the data shows soft inflation. The U.S. consumer price index (CPI) data is due at 12:30 GMT, while the producer price index and initial jobless claims are due on Thursday.
Traders expect the CPI report to show that inflation is nearing the Fed’s 2 percent target, supporting Chair Jerome Powell’s view, and play a critical role in determining the size of the interest rate cut next week.
Traders are currently pricing in a 65 percent chance of a 25-basis-point cut and a 35 percent chance of a 50-basis-point cut, according to the CME FedWatch Tool. A lower interest rate environment in addition to rising geopolitical tensions raises the appeal of non-yielding bullion.
The dollar index declined by 0.30 percent, raising gold’s appeal for holders of other currencies.
Data from the Chicago Board of Trade (CBOT) revealed that the Fed is anticipated to cut at least 108 basis points this year based on the Fed funds rate futures contract for December 2024.
Read: Nasdaq Dubai welcomes $400 million green bond from Bank of China
Other precious metals
As gold prices rose, the precious metals market saw positive movements on Wednesday. Spot silver rose 0.18 percent to $28.43 while platinum gained 0.36 percent to $941.06. In addition, palladium inched up 1.07 percent to $975.47.
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