Rising Middle East tension and weaker dollar lift gold

Bengaluru — Gold prices rose on Thursday, bolstered by rising tension in the Middle East and a weaker dollar, while softer-than-expected US inflation data boosted the expectation of Federal Reserve rate cuts.

Spot gold was up 0.7% at $3,375.06/oz 3.43am GMT. US gold futures gained 1.5% to $3,395.

The dollar index fell to a near two-month low, making greenback-priced bullion more attractive to overseas buyers.

The weakness in the dollar index served as a strong catalyst, said Kelvin Wong, a senior market analyst for Asia-Pacific at Oanda, adding that a “bullish breakout” of the $3,346 resistance triggered technical buying.

Rising geopolitical risks aided safe-haven assets, with President Donald Trump announcing on Wednesday that US personnel were being moved out of the Middle East due to heightened security risks amid rising tension with Iran.

Meanwhile, US consumer prices increased less than expected in May, driven by cheaper petrol, though inflation could accelerate due to import tariffs. The data prompted renewed calls from Trump for significant rate cuts.

“We could potentially see the Fed moving more quickly than anticipated, given the CPI data, which is not particularly alarming at this juncture,” Wong said.

Traders now expect 50 basis points of rate cut by year-end.

US producer price index data is due at 12.30pm GMT.

Meanwhile, Trump said on Wednesday that Washington and Beijing had agreed on a framework to restore a fragile truce in the US-China trade war, potentially avoiding higher tariffs.

Trump added he could extend a July 8 deadline for trade talks with other nations before higher US tariffs take effect but did not foresee such a need.

Elsewhere, spot silver was up 0.4% at $36.38/oz, platinum rose 1.3% to $1,272.50, still hovering near a more than four-year high, while palladium was down 1% at $1,068.92.

Reuters