Gold Prices Rise as Focus Shifts to Key US Inflation Data
Gold prices rose in European trading on Wednesday, holding above its one-week low reached earlier in the Asian session. The precious metal's price increased by 1.3% to $4,412.86, from an opening level of $4,355.53, after hitting a session low of $4,341.40.
The US dollar index fell 0.2% on Wednesday, extending losses for a third consecutive session and hitting a three-week low. This weakness in the US currency makes dollar-denominated gold more attractive to buyers holding other currencies.
Market attention will focus on key US inflation data for August, which is expected to provide crucial signals about the Federal Reserve's interest rate path in the coming period. According to CME's FedWatch Tool, the probability of the Federal Reserve leaving interest rates unchanged at its September meeting currently stands at 40%, while the probability of a 25-basis-point rate hike stands at 60%.
Kelvin Wong, senior market analyst for Asia-Pacific at OANDA, stated that 'the gold market is seeing a short-term tug of war between buyers and sellers.' He added that expectations of a hawkish Federal Reserve are weighing on gold prices, but the debasement trade and concerns over the fiscal deficit continue to provide support.