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

New York: Gold experienced a slight increase on Thursday, buoyed by a weaker dollar, as market participants awaited crucial US inflation data that could influence the Federal Reserve's interest rate decisions. Spot gold rose 0.3% to US$4,412.84 per ounce, while US gold futures for December delivery dropped 0.1% to US$4,457.10. Geopolitical events in the Persian Gulf are currently secondary to gold's performance, which is primarily driven by a weaker dollar.

Despite the Federal Reserve's anticipated rate hikes, the US dollar has remained relatively stable, making dollar-priced metals like gold more affordable for international investors. The upcoming US Producer Price Index data at 12:30 GMT and consumer inflation figures due on Friday will likely provide further insights. The Federal Reserve will maintain its interest rates steady during its September 15-16 meeting and throughout the remainder of the year, contrary to market predictions for multiple increases, according to a majority of economists surveyed by Reuters.

A Reuters poll indicated a 60% probability of a US rate increase this month. Higher interest rates typically make non-yielding assets less appealing to investors. Daniel Hynes, senior commodities strategist at ANZ, highlighted that US fiscal pressures continue to erode confidence in the long-term value of government debt and the currency supporting it, thereby supporting gold prices.

In the previous month, US debt surpassed the US$40 trillion mark for the first time, prompting warnings of an impending fiscal crisis. Among other precious metals, spot silver increased 0.2% to US$67.42 per ounce, while platinum declined 0.6% to US$1,885.02, and palladium rose 0.2% to US$1,355.50.