Gold held firm near a more-than-two-week peak on Thursday, as the dollar softened and investors hunkered down for Friday’s U.S. inflation data for cues on the Federal Reserve’s policy path.
Spot gold was up 0.1% at $3,399.60 per ounce, as of 0851 GMT, after hitting $3,401.73, its highest level since August 11, earlier in the session.
U.S. gold futures for December delivery edged 0.2% higher to $3,456.20.
The dollar index was down 0.1% against its rivals.
Investors are awaiting the release of the Personal Consumption Expenditures (PCE) Price Index, the preferred inflation measure for the Fed on Friday. Economists polled by Reuters expect the PCE price index to rise 2.6% in July, matching the climb from June.
“Market consensus is that July’s PCE inflation will show an uptick compared with the previous reading, a scenario that is already priced in. A surprise to the upside would likely strengthen the dollar and increase Treasury yields, weighing on gold prices,” said Ricardo Evangelista, senior analyst at ActivTrades.
“The opposite outcome could fuel expectations of a more dovish Fed, softening the dollar and supporting the precious metal.”
Markets expect a more than 87% chance of a 25-basis-point rate cut at the Fed’s policy meeting next month, according to CME FedWatch Tool.
Non-yielding gold typically performs well in a low-interest-rate environment.
New York Fed Bank President John Williams said on Wednesday that interest rates could likely fall at some point, but policymakers will need to gauge upcoming data.
Traders are also keeping an eye on U.S. President Donald Trump’s moves to assert control over the Fed. Earlier this week, Trump said he was firing Fed Governor Lisa Cook.
“Many see the dispute as a threat to the Fed’s independence and credibility, which is supportive for the precious metal,” said Evangelista.
Elsewhere, spot silver was up 0.5% at $38.82 per ounce, platinum lost 0.1% to $1,345.75 and palladium climbed 0.4% to $1,096.29.
