Gold edges higher on weaker dollar, US inflation data in focus

Gold prices rose slightly on Thursday, buoyed by a weaker U.S. dollar and anticipation of upcoming inflation data that could influence the Federal Reserve's interest rate decisions. Spot gold climbed 0.3% to $4,412.84 an ounce, while December futures slipped 0.1% to $4,457.10. Analyst Edward Meir noted that geopolitical events in the Middle East have taken a backseat to the dollar's decline, which is making dollar-denominated metals more affordable for investors holding other currencies.

U.S. inflation figures are expected to be released on Friday, with producer price index data due at 12:30 GMT. However, the Federal Reserve maintained its interest rate at a steady level during its September 15-16 meeting and for the remainder of the year, defying expectations of multiple hikes, according to a majority of economists in a Reuters poll.

The CME FedWatch Tool indicated a 60% probability of a U.S. rate increase this month. Higher interest rates typically reduce the appeal of non-yielding assets, making gold more attractive to investors.

Daniel Hynes, senior commodities strategist at ANZ, explained that gold remains a safe haven as U.S. fiscal pressures continue to raise doubts about the long-term value of government debt and the currency used to fund it. Earlier this month, U.S. debt surpassed $40 trillion for the first time, sparking concerns about an impending fiscal crisis.

On the geopolitical front, Iran announced it had targeted 10 ships near the Strait of Hormuz following the U.S. sinking of five Iranian oil tankers, marking the most significant wave of attacks between both sides since the six-month-old conflict began. Other precious metals also experienced slight movements, with spot silver up 0.2% to $67.42 per ounce, platinum down 0.6% to $1,885.02, and palladium rising 0.2% to $1,355.50.