Weaker Dollar Boosts Gold as Inflation Data Looms
Gold prices inched higher on Thursday, buoyed by a weaker US dollar and anxieties over inflation data. Spot gold was up 0.3% at $4,412.84 per ounce, while US gold futures for December delivery fell 0.1% to $4,457.10.
Analysts pointed to the softer dollar as the main driver behind gold's gain, making dollar-priced metals less expensive for holders of other currencies. Marex analyst Edward Meir noted that the weaker dollar is not moving up despite higher US interest rates, which typically make non-yielding assets like gold less attractive.
The upcoming release of US inflation data could have a significant impact on the Federal Reserve's interest-rate path, with economists in a Reuters poll predicting no rate hikes for the rest of this year. The CME FedWatch Tool showed markets pricing in a 60% chance of a US rate increase this month, which would generally make gold less appealing to investors.
However, total US debt has surpassed $40 trillion, leading to concerns over fiscal pressures and the long-term value of government debt and currency. Daniel Hynes, senior commodities strategist at ANZ, stated that gold is supported 'as US fiscal pressures continue to undermine confidence in the long-term value of government debt and the currency used to finance it.'