Gold Climbs on Rising Middle East Tensions Weaker Dollar

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

Spot gold was up 0.6% at $3,373.09 an ounce, as of 0552 GMT. US gold futures gained 1.5% to $3,393.80.

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

The weakness in the dollar index serves as a strong catalyst, said Kelvin Wong, a senior market analyst, 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 tensions with Iran.

Meanwhile, US consumer prices increased less than expected in May, driven by cheaper gasoline, 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 expect 50 basis points of rate cuts by year-end.

Investors awaited US producer price index data due at 1230 GMT for further clues on rate cut path.

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.

Elsewhere, spot silver was up 0.4% at $36.38 per ounce, platinum rose 1.2% to $1,271.15, still hovering near a more than 4-year high, while palladium was down 1.1% at $1,068.19.

aawsat.com