Gold prices rose in early Wednesday trading, supported by growing expectations of further rate cuts from the Federal Reserve and increased safe-haven demand. Yesterday’s downward revision of US labour figures highlighted the cooling labour market, putting pressure on the dollar and supporting the precious metal due to the inverse correlation between the two assets. Gold is also benefiting from heightened safe-haven demand following a flare-up in Middle East tensions after Israel attacked a target in Qatar. Against this backdrop, traders will be closely watching the release of US PPI inflation for August later today and CPI tomorrow. Market consensus points to only small changes from the previous readings, so any upside surprise could see markets pricing in more aggressive Fed rate cuts — a dynamic that may weaken the dollar and create further scope for gold price gains.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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