Gold rises on weaker dollar, rising Middle East tensions
NEW YORK: Gold prices rose on Thursday, bolstered by rising tensions in the Middle East and a weaker dollar, while softer-than-expected US inflation data boosted expectations of Federal Reserve rate cuts.
Spot gold was up 0.6 per cent at US$3,372.46 an ounce, as of 0202 GMT. US gold futures gained 1.5 per cent to US$3,393.
The US dollar index fell to a near two-month low, making greenback-priced bullion more attractive to overseas buyers.
The weakness in the dollar index serves as a strong catalyst, said Kelvin Wong, a senior market analyst, Asia Pacific at OANDA, adding that gold faced resistance at US$3,346, and the bullish breakout triggered technical buying.
Rising geopolitical risks aided safe-haven assets, with President Donald Trump announcing on Wednesday that US personnel were being moved out of the Middle East due to heightened security risks amid rising tensions with Iran.
Meanwhile, US inflation data showed consumer prices increased less than expected in May, driven by cheaper gasoline, though inflation could accelerate due to import tariffs. The data prompted renewed calls from Trump for significant rate cuts by the Fed.
"We could potentially see the Fed moving more quickly than anticipated, given the CPI data, which is not particularly alarming at this juncture," Wong said.
Traders now anticipate a 50-basis-point rate cut by year-end and await US producer price index data, due at 1230 GMT, for further clues ahead of the Fed's June 17-18 meeting.
Meanwhile, Trump said on Wednesday that Washington and Beijing had agreed on a framework to restore a fragile truce in the US-China trade war, potentially avoiding higher tariffs.
Trump added he could extend a July 8 deadline for trade talks with other nations before higher US tariffs take effect but did not foresee such a need.
Elsewhere, spot silver was up 0.3 per cent at US$36.33 per ounce, platinum rose 0.6 per cent to US$1,265.32, still hovering near more than 4-year high, while palladium was down 1 per cent at US$1,068.97.
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