Gold prices climbed on Wednesday, moving back toward a 10-week high as investors reduced expectations of an imminent US interest rate increase and awaited crucial inflation data that could reshape the Federal Reserve’s policy outlook.
Spot gold gained 0.6 percent to $4,391.82 per ounce by 0535 GMT, while US gold futures for December delivery advanced 0.2 percent to $4,451.90. Bullion had touched a 10-week high on Tuesday before encountering technical resistance and retreating from those levels.
The renewed strength in gold follows weaker-than-expected US employment data, which prompted traders to scale back expectations that the Federal Reserve will raise interest rates at its September meeting. Markets were pricing roughly a 50 percent probability of a September increase, down from around 60 percent before the latest jobs report.
Interest-rate expectations are particularly important for bullion because gold does not generate interest. When expectations for higher rates weaken, the opportunity cost of holding gold falls, potentially making the precious metal more attractive to investors.
Attention has now shifted to the US Consumer Price Index figures due later Wednesday. Economists surveyed by Reuters expect consumer prices to have increased 0.1 percent in July, following a 0.4 percent decline in June, while annual inflation is forecast at 3.4 percent. Core inflation is expected to rise 0.2 percent month-on-month and 2.5 percent from a year earlier.
The numbers could influence expectations for the Federal Reserve’s September decision. Inflation remains above the central bank’s 2 percent target, while policymakers are balancing persistent price pressures against signs of weakness in the labour market.
Geopolitical uncertainty is also supporting the broader precious-metals market. Oil prices have extended gains amid renewed attacks on shipping and uncertainty surrounding the Iran conflict, while Tehran has maintained that the Strait of Hormuz will remain closed unless its conditions are met.
Other precious metals also moved higher. Spot silver rose 0.8 percent to $65.20 per ounce, platinum gained 0.2 percent to $1,748.03, and palladium advanced 0.8 percent to $1,370.75.
Gold’s next major move may now depend on whether the US inflation figures reinforce expectations that the Federal Reserve can keep rates unchanged or revive concerns that another increase will be necessary. With monetary policy and geopolitical risks both in focus, bullion remains close to its strongest level in more than two months.
