Gold Inches Upward as Soft Dollar Helps as Traders Await U.S. Inflation Data

Gold prices were up slightly on Thursday, September 10, with a soft U.S. dollar providing some support to the yellow metal amid expectations for U.S. inflation data. 

Gold prices were up 0.3% to $4,414.28 per ounce at 0419 GMT. Meanwhile, U.S. gold futures for December delivery were down 0.1% at $4,457.20. 

The US dollar was weak during the trading session. A softer U.S. dollar is beneficial for metals priced in dollars because they become cheaper for other-currency users. 

US Inflation Data Takes Centre Stage 

The next major cues for gold are expected from the U.S. inflation numbers. 

Producer price index data is due at 1230 GMT on Thursday, while consumer inflation figures are scheduled for Friday. The readings will be closely watched as markets assess the direction of U.S. interest rates. 

The Federal Reserve is due to meet on September 15-16. 

A majority of economists surveyed in a Reuters poll expect the central bank to keep interest rates unchanged at the September meeting and through the rest of the year. 

Market pricing paints a different picture. The CME FedWatch Tool showed a 60% probability of a U.S. rate increase this month. 

Interest rates remain particularly relevant for gold because the metal does not offer a yield. Higher rates can therefore reduce its relative appeal compared with interest-bearing assets. 

US Debt Crosses $40 Trillion 

The broader U.S. fiscal position is also part of the backdrop for the precious metal. 

Total U.S. debt crossed $40 trillion for the first time last month, bringing renewed attention to concerns surrounding the country’s fiscal position. 

Gold’s move on Thursday came as the dollar remained soft despite higher U.S. rates, giving bullion some room to recover. 

U.S.-Iran Conflict Remains in the Background 

Geopolitical tensions also remain elevated, although Thursday’s gold-market focus was centred more heavily on the dollar and upcoming inflation data. 

Iran said on Wednesday that it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers. 

The attacks marked the biggest wave of strikes on shipping by both sides since the six-month-old war began. 

Silver and Palladium Appreciate, Platinum Depreciates 

On the other hand, there were some other precious metals that demonstrated mixed behavior on Thursday. 

Specifically, silver appreciated by 0.3% to close at $67.50 an ounce, while palladium appreciated by 0.2% to end the day at $1,356.20. 

The only exception from this trend was platinum, which dropped by 0.4% to trade at $1,888.05 per ounce. 

When it comes to gold, one can say that its appreciation on Thursday had a rather simple explanation – a weak US dollar along with market hesitation before the publication of U.S. inflation figures and the FOMC meeting in September.