Dollar Weakness Drives Gold Prices Up Ahead of US Inflation Data

Gold prices are on the rise as the US dollar weakens ahead of crucial inflation data releases this week. The precious metal has inched up by 0.3% to $4,418.79 an ounce at 0048 GMT.

The decline of the dollar index by 0.3% makes dollar-denominated metals less expensive for buyers holding other currencies. This development comes as investors await Thursday's US Producer Price Index (PPI) and Friday's Consumer Price Index (CPI) data, which could influence expectations about the Federal Reserve's next monetary policy move.

The probability of an interest-rate hike at the Federal Reserve's policy meeting next week stands at 60%, according to CME Group's FedWatch Tool. However, higher interest rates reduce gold's appeal as a non-yielding metal. Despite this, Deutsche Bank now expects the European Central Bank to raise interest rates by 25 basis points in December, in addition to the increase expected in September.