Gold Surges as Dollar Weakens Ahead of Inflation Data
Gold prices surged more than 1% on Wednesday as the US dollar weakened ahead of key inflation data. Spot gold rose 1.4% to $4,414.30 per ounce by 1:54pm EDT. The dollar's decline made dollar-denominated bullion cheaper for holders of other currencies.
The rally in oil prices also contributed to the gain in gold, with Brent crude crossing $100 a barrel for the first time since July 24 amid a widening conflict in the Middle East. David Meger, director of metals trading at High Ridge Futures, said recent pressure on the dollar had provided some support to the gold market.
The oil rally has renewed inflation concerns as freight and supply-chain disruptions add to price pressures. Investors are now awaiting the US producer price index (PPI), due on Thursday, followed by consumer price inflation data on Friday, for indications of whether the Federal Reserve will raise rates to contain inflation. Traders are pricing in around a 60% probability of an interest rate increase at the Fed's policy meeting next week.