Gold firms on softer dollar, inflation data and Mideast risks in focus

Gold prices rose on Wednesday as the U.S. dollar remained relatively stable, with investors closely watching the Federal Reserve's interest-rate outlook amid renewed tensions between the U.S. and Iran. Spot gold increased by 0.6% to $4,381.32 per ounce by 0505 GMT, while U.S. gold futures slipped by 0.3% to $4,424.70. The dollar's relative weakness made dollar-priced metals more affordable for holders of other currencies.

Analysts noted a tug of war between bulls and bears in the short term, with the potential for continued volatility until the release of the Consumer Price Index report on Friday. Factors such as expectations of hawkish Fed policy, dollar debasement, and concerns about fiscal deficits continue to support gold prices. Meanwhile, rising crude oil prices and the prospect of higher inflation pose challenges for the appeal of gold as an inflation hedge, though global supply constraints may provide fundamental support for the metal in the long run.