Gold prices rose to their highest level in nearly one month on Thursday, supported by a weaker U.S. dollar after softer U.S. inflation data boosted hopes that the Federal Reserve will slow down interest rate hikes.
Spot gold was up 0.3% at $1,962 an ounce, its highest since June 16. U.S. gold futures gained 0.2% to $1,966 per ounce.
The dovish inflation data boosted hopes that the Fed may slow its interest rate increases, thereby reducing pressure on gold. Fed rate hikes increase the opportunity cost of holding non-yielding bullion.
However, analysts say the Fed will likely maintain a hawkish stance given inflation remains elevated. But gold could rise toward $1,800 levels despite currently trading near $2,000.
The weaker dollar, driven by the inflation data, also supported gold prices. An easing dollar makes greenback-priced gold more attractive for buyers holding other currencies.
In broader financial markets, Asian shares and bonds rallied on expectations of slower Fed tightening.
Gold is trying to stabilize after recent declines driven by Fed rate hike bets. Focus now turns to U.S. jobless claims and producer price inflation data due Thursday.
Analysts say gold remains vulnerable to U.S. economic data and any signals from the Fed. But the short-term outlook has somewhat improved on hopes of less hawkish policy moves.
Among other metals, silver and platinum gained while palladium prices rose more than 1%. Higher industrial metal prices indicate a more positive outlook for economic growth and demand.
In summary, gold prices jumped to their highest in almost a month supported by a weaker dollar and lower U.S. inflation expectations that reduce pressures for aggressive Fed rate hikes. However, analysts say the Fed is still likely to continue tightening, so gold's gains may be limited for now.
