Gold increases in early trade due to weaker dollar and rising yields

12 Jul 2023 , 12:18 PM

Following the retreat of the dollar and bond yields on Wednesday, gold prices marginally increased as investors carefully awaited U.S. inflation data that would provide additional clues on the Federal Reserve’s policy of rate hikes.

Spot gold increased 0.2% to $1,935.39 per ounce. American gold futures increased by 0.2% to $1,940.40.

The dollar index dropped 0.2% to its lowest level since May 11, making gold more affordable for owners of foreign currencies. Standard 10-year U.S. Treasury yields decreased as well, falling to their lowest level in almost a week. 

While a few Fed officials said on Monday that the organization was almost done tightening its monetary policy, Fed Bank of New York President John Williams reaffirmed on Tuesday that the organization was still hiking its short-term rate objective.

Investors are waiting for June inflation data, which is scheduled to be released at 12:30 GMT. According to experts surveyed by Reuters, the consumer price index will have increased by 3.1% after rising by 4% in May, while core interest rates are predicted to have decreased to 5% from 5.3%.

According to CME’s Fedwatch tool, markets expect the Fed to increase interest rates by 25 basis points during its policy meeting on July 25–26.

Although owning non-yielding metal comes at a higher opportunity cost when interest rates are higher, gold is nevertheless considered a secure investment during periods of political and economic turmoil.

According to data released on Wednesday, Japan’s wholesale inflation decreased for a sixth consecutive month in June as a result of falling gasoline and commodity costs.

Spot silver increased 0.4% to $23.18 per ounce, while platinum and palladium both increased by 0.4% to $927.63 and $1,250.10, respectively.

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