Rate cut bets push gold to one-week high, focus now on US PPI data
Gold prices rose to a one-week high on Thursday, driven by softer U.S. inflation data that strengthened expectations of Federal Reserve rate cuts this year, while investors looked to another set of inflation data for further direction.
Spot gold was up 0.2% at $3,360.29 an ounce, as of 0838 GMT, after hitting its highest level since June 5 earlier in the day.
U.S. gold futures gained 1.1% to $3,380.00.
The U.S. dollar index fell 0.3% to a near two-month low. A softer dollar makes bullion cheaper for buyers holding other currencies.
"Gold remains stuck... with a break above $3,400 needed to change that. Near term focus (is) on Middle East developments, the dollar and speculation about the timing of the next U.S. rate cut," said Ole Hansen, head of commodity strategy at Saxo Bank.
Data showed the U.S. Consumer Price Index increased 0.1% last month after rising 0.2% in April. Economists polled by Reuters had forecast CPI climbing 0.2% and increasing 2.5% year-on-year.
Markets are now pricing in at least 50 basis points of rate cuts this year.
Gold, a safe-haven asset, often thrives during uncertain economic times and in low-interest-rate environments.
Investors are now turning their focus to the U.S. Producer Price Index data due at 1230 GMT, ahead of the Federal Reserve's meeting on June 17–18.
"PPI will be watched to see whether they can spring a CPI-like surprise or whether expectations for rising input prices will be confirmed," Hansen added.
On the geopolitical front, U.S. President Donald Trump said on Wednesday U.S. personnel were being moved out of the Middle East because "it could be a dangerous place", adding that the United States would not allow Iran to have a nuclear weapon.
Elsewhere, spot silver was down 0.8% at $35.94 per ounce, platinum rose 0.3% to $1,260.14, hovering at a more-than four-year high, while palladium was down 1.9% at $1,059.25.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Emelia Sithole-Matarise)
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