Gold rises from 3-week lows as the US dollar and rates decline in early trade

14 Sep 2023 , 09:54 AM

After the U.S. inflation statistics strengthened the argument for a Federal Reserve rate pause next week, gold prices rose on Thursday as the dollar and Treasury yields declined, albeit bullion was still relatively close to the near three-week lows recorded in the previous session.

After falling to $1,905.10 on Wednesday, spot gold increased 0.3% to $1,912.09 per ounce. At $1,933.70, U.S. gold futures were up 0.1%.

The cost of gasoline lifted U.S. consumer prices by the highest in 14 months in August, but the annual increase in underlying inflation was the smallest in nearly two years, suggesting a Fed rate pause next week. The U.S. dollar index and 10-year Treasury yields decreased as a result.

Data collected since their last meeting provided some indication of a significant decrease in inflation and a weakening economy, but probably not enough to dispel concerns about the necessity for additional rate rises later this year.

According to the CME’s FedWatch Tool, traders currently perceive a 96% chance that the Fed will keep interest rates constant on Wednesday, whereas the odds of a pause in November were at 51%.

The European Central Bank will decide on Thursday whether to continue fighting inflation by raising its benchmark interest rate to a record high or taking a break as the economy deteriorates.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased 0.3% to 882.00 tonnes on Wednesday.

Spot silver increased by 0.3% to $22.89 an ounce, platinum increased by 0.2% to $902.05, and palladium decreased by 0.2% to $1,257.26.

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