Gold prices increased on Wednesday as the dollar weakened, with investors shifting their focus to upcoming U.S. economic data for further indications on the timing of potential interest rate cuts by the central bank. As of 1528 GMT, spot gold had risen about 0.8% to $2,427.46 per ounce, while U.S. gold futures saw a gain of approximately 0.9% to $2,427.60.
Jim Wyckoff, a senior market analyst at Kitco Metals, attributed the rise in gold and silver interest to a weaker U.S. dollar index, lower U.S. stock index prices, and higher crude oil prices. The dollar index fell by 0.2%, making bullion more appealing to buyers using other currencies. The tech-heavy Nasdaq suffered the most during a weak opening on Wall Street on Wednesday.
Investors are eagerly awaiting the release of the U.S. second-quarter gross domestic product report on Thursday and the personal consumption expenditures data for June on Friday, which could provide insights into the Federal Reserve's potential rate cut trajectory. Chris Gaffney, president of world markets at EverBank, noted that market expectations of an earlier-than-September rate cut by the Fed are currently supporting gold prices. Additionally, the reduction of import taxes on gold and silver in India from 15% to 6% is expected to boost demand.
According to the CME FedWatch Tool, markets are pricing in a 100% chance of a rate cut by the central bank in September. Lower interest rates decrease the opportunity cost of holding non-yielding gold. Investors are also monitoring developments in the U.S. election campaign, with Vice President Kamala Harris anticipated to be the Democratic Party's candidate against Republican Donald Trump. Meanwhile, spot silver climbed 0.5% to $29.36 per ounce, platinum increased 1.9% to $961.50, and palladium rose 2.1% to $945.38.
