Gold Prices Climb as Dollar Weakens

Gold Prices Rise Amid Weak Dollar and Rate Cut Anticipations

Gold prices showed moderate gains on Wednesday following softer inflation data from the United States, which weakened the dollar and reinforced market expectations for a rate cut in September. Investors are now focusing on the upcoming US-Russia talks, offering a potential easing of war tensions.

The spot price of the precious metal rose by 0.3% to $3,355.30 per ounce, while December futures in the United States increased by 0.2% to $3,405.50. The weaker dollar has made gold purchases more favorable for investors holding international currency reserves, thereby boosting demand. At present, the price hovers around the $3,350 level, as the market monitors geopolitical developments.

The US consumer price index for July rose by 0.2% compared to the previous month, marking a slowdown from June's 0.3% increase. On an annual basis, inflation was measured at 2.7%. This milder price rise further strengthened the expectations that the Federal Reserve could cut rates as soon as September, with another cut conceivable by year’s end. A low-interest-rate environment traditionally benefits gold, as non-yielding assets become more competitive against bonds.

In terms of trade tensions, a positive development occurred as the United States and China extended a tariff suspension agreement by another 90 days, avoiding the reinstatement of high mutual tariffs. This move somewhat reduces market uncertainty, which could also support investor risk-taking.

In the precious metals market, spot silver rose by 1.2% to $38.35, platinum by 1% to $1,348.70, and palladium by 0.8% to $1,138.04 per ounce. In the coming days, investors will be watching the US producer price index, weekly unemployment data, and retail sales trends for further guidance on economic outlook and the future of monetary policy.

(Source of the article: Expectations for Donald Trump and Vladimir Putin Meeting.)