Weaker Dollar Drives Gold Prices Higher Amid Inflation Concerns
Gold prices rose on Wednesday due to a softer US dollar, making gold more affordable for buyers overseas. Spot gold increased by 1.1% to $4,401.60 per ounce, while US gold futures for December delivery gained 0.1% to $4,445.30.
Lukman Otunuga, senior research analyst at FXTM, attributed the rise in gold prices to a weaker dollar and technical buying, noting that gold is bouncing from its 100-day moving average. However, he also mentioned that investors are bracing themselves for key price data releases on Thursday and Friday, which could impact the Federal Reserve's policy outlook.
The US dollar has been weakening, with a broader dollar softness outweighing pressure on gold prices. This is despite Brent crude prices rising above $100 per barrel for the first time since July 24. Investors are also anticipating the producer price index (PPI) data release on Thursday and consumer price index (CPI) data on Friday.
Ole Hansen, head of commodity strategy at Saxo Bank, warned that bears may focus on an emerging head-and-shoulders formation in gold prices, with a break below $4,300 potentially signaling a deeper correction towards the established support area around $4,000.