Gold Price Rises as Weaker Dollar Battles Rising Oil Prices Ahead of Key Economic Reports
The price of gold (XAU/USD) has been fluctuating around $4,414 - $4,426 on Thursday. The metal is benefiting from a weaker US dollar, which is expected to remain weak before the release of the Producer Price Index (PPI) at 12:30 GMT today and the Consumer Price Index (CPI) on Friday.
The market is in a holding pattern between the US dollar and strong geopolitical forces. If Brent crude oil stays above $100, and if there are increasing yields on Treasuries, those forces will act against gold. However, gold is holding firm, with a 60% chance of breaking through to $4,512 if it can overcome the resistance at $4,449.
The PPI report is the first major report before the FOMC meeting on September 15-16. The markets see a 60% chance of a September interest rate increase, but 65 out of 93 economists in a survey do not see an increase. This discrepancy will be heavily influenced by the upcoming inflation reports.
The dollar's weakness is supporting gold, despite climbing Treasury yields. Gold is currently trading in a healthy range above $4,400 due to this divergence. However, if oil prices remain above $100, it could lead to increased inflation concerns and put pressure on gold.