Gold prices firmed on Wednesday as
the dollar remained subdued, while renewed US-Iran tensions
and upcoming inflation data kept investors focused on the
interest-rate outlook.
Spot gold was up 0.6 per cent at $4,381.32 per ounce, by 0505
GMT. US gold futures lost 0.3 per cent to $4,424.70.
The U.S. dollar remained muted, making dollar-priced metals
more affordable for holders of other currencies.
“In the gold market, there is a tug of war in the short term
between the bulls and the bears. We may see this kind of
movement until the end of this week, when the CPI report is
released,” said Kelvin Wong, senior market analyst at OANDA.
“While expectations of a hawkish Fed weigh on gold, the
dollar debasement trade and concerns about fiscal deficits
remain supportive for prices.”
Markets are awaiting US producer price index data due on
Thursday, with consumer price index data set to follow on
Friday.
Iran’s Revolutionary Guard said it fired ballistic missiles
at a base in Jordan used by the US military and attacked 10
ships, after the US said it had destroyed five Iranian oil
tankers, in a sharp escalation of the six-month-old war.
Brent crude prices jumped for a fourth consecutive session.
Rising crude prices tend to put upward pressure on inflation, as
higher energy costs filter through the broader economy.
According to the CME FedWatch Tool, traders see about a 60 per cent
chance that the Federal Reserve will raise interest rates at its
upcoming policy meeting.
Although gold is widely regarded as an inflation hedge,
elevated rates weigh on the appeal of non-interest-bearing
bullion.
“Precious metals face a near-term test, but another major
selloff is unlikely,” said Kelly Xu, a commodities strategist at
Alpine Macro.
“Physical market tightness remains a key issue, while
structural supply deficits could persist amid inelastic mine
production and ongoing demand from electrification, electronics
and AI-related infrastructure, providing fundamental support for
silver over the longer term.”
Spot silver gained 0.9 per cent to $66.31, platinum
rose 1.1 per cent to $1,833.58, while palladium fell 0.1 per cent to
$1,347.82.