Gold Soars on Weaker Dollar and Slowing Inflation

Gold prices surged by more than 3% on Thursday as a weaker US dollar and fresh inflation data boosted demand. The gains came despite investors scaling back their expectations for another Federal Reserve interest rate hike after Fed Chair Kevin Warsh offered limited guidance.

The US Dollar Index fell around 0.9%, making gold less expensive for overseas buyers and supporting demand. Spot gold rose to $4,173.90 per ounce, while US August gold futures gained 1.9% to $4,108.30 per ounce.

However, investors remain cautious as renewed tensions in the Middle East and higher oil prices threaten to add fresh inflationary pressures, potentially slowing down the slowdown in inflation. Markets are now pricing in a 57% probability of a 25-basis-point interest rate increase at the Federal Reserve's September 15-16 meeting.