Gold rises on a weaker dollar as investors focus on US inflation data

11 Sep 2023 , 09:52 AM

As investors awaited this week’s U.S. inflation statistics, which would suggest the Federal Reserve’s next interest rate move, gold prices started the week on a strong note on Monday, helped by a decline in the dollar.

Spot gold was up 0.1% at $1,919.52 per ounce, but it was still close to one-week lows reached on September 6. During the previous week, gold fell 1%. At $1,943, U.S. gold futures remained stable.

The benchmark 10-year bond yield and the U.S. currency both fell by 0.2%, increasing the appeal of non-yielding bullion to foreign investors.

On Wednesday, the Consumer Price Index (CPI) for August is forthcoming, and this year’s interest rate choices by the Fed are anticipated to be influenced by it.

Before this month’s policy-setting meeting, the Fed’s decision-makers made two things quite clear: They are not eager to raise interest rates, but few of them are also prepared to declare triumph.

The majority of economists surveyed by Reuters predict that the European Central Bank will maintain interest rates on September 14; however, just under half anticipate one more increase this year to control inflation.

The Yomiuri newspaper reported on Saturday that Bank of Japan Governor Kazuo Ueda stated the central bank could abandon its negative interest rate policy when fulfilment of its 2% inflation objective is in sight, suggesting potential interest rate hikes.

According to data released on Saturday, China’s consumer prices returned to positive territory in August while factory-gate price cuts slowed as deflationary pressures eased amid indications of economic stabilization.

In India, physical gold discounts reached their highest level in seven weeks, while in China, premiums rose last week amid modest demand optimism sparked by the nation’s policy initiatives to assist the economy.

Spot silver increased by 0.2% to $22.95 an ounce, platinum increased by 0.1% to $893.04 after falling by 7% last week, and palladium nudged up by 0.1% to $1,199.03.

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