Gold prices reached a nearly three-week high on Tuesday 11th of July 2023, supported by a weaker dollar, as investors awaited U.S. inflation data that could impact the Federal Reserve’s decision on interest rate hikes.
At 1223 GMT, spot gold was up 0.4% at $1,932.69 per ounce, marking its third consecutive session of gains. U.S. gold futures also rose 0.4% to $1,938.20.
UBS analyst Giovanni Staunovo commented on the reaction to the U.S. inflation data, stating that gold would benefit if inflation were to surprise on the downside. This would suggest a potential earlier end to the Federal Reserve’s rate hiking cycle.
Gold, considered a safe-haven asset, tends to perform well during periods of economic and financial uncertainty. Additionally, lower interest rates increase the appeal of gold, which is a zero-yielding asset.
The weaker dollar has also supported gold prices. The Federal Reserve’s implication that it is nearing the end of its tightening cycle has contributed to a decline in the dollar index, making gold more affordable for holders of other currencies.
UBS’s Staunovo noted that ongoing central bank gold purchases are likely supporting the yellow metal.
In other news, a key measure of British wages showed record growth rates. However, there are indications that inflationary pressures in the labor market may be easing, providing some potential relief for the Bank of England.
Among other precious metals, spot silver remained steady at $23.09 per ounce, while platinum declined by 0.1% to $925.99, and palladium slipped 0.4% to $1,235.70.
