Slight Increase in Gold Prices Supported by Dollar Decline and Interest Rate Cut Expectations
Gold prices saw a slight increase today, Wednesday, August 13, as the US dollar declined following the release of moderate US inflation data, which bolstered expectations that the Federal Reserve would cut interest rates soon. This rise came amid market anticipation of potential US-Russian talks this week regarding the Ukrainian crisis.
In the spot market, the price of an ounce rose by 0.1% to reach $3349.83, while US gold futures for December delivery remained stable at $3398.90.
Experts attributed this improvement to the weakness of the US dollar, with Tim Waterer, Senior Market Analyst at KCM Trade, commenting: "The decline in the dollar has allowed for a moderate recovery in gold prices, as the precious metal hovers around the $3350 per ounce level ahead of the Trump-Putin meeting on Friday."
Waterer also added, anticipating the impact of US-Russian negotiations: "If the meeting in Alaska does not yield any results and the war in Ukraine continues, this could push gold back towards the $3400 per ounce level."
On another note, the White House attempted to temper expectations regarding the upcoming summit between Presidents Trump and Putin, describing it as a "listening exercise" for the US president, indicating that a quick agreement for a ceasefire is not anticipated.
US inflation data showing a 0.2% increase in July and 2.7% year-on-year contributed to supporting this upward trend, as the slowdown in inflation led to a decline in the dollar and increased the appeal of gold as a safe haven.
Market estimates indicate a 90% chance of an interest rate cut in September, with another cut expected before the end of the year, which boosts demand for the yellow metal that benefits from a low-interest-rate environment.
In a related context, easing trade tensions between Washington and Beijing contributed to supporting market sentiment, after the two countries extended the tariff truce for an additional 90 days.
Regarding other precious metals, silver recorded a rise of 0.8% to reach $38.17 per ounce, while platinum fell by 0.1% to $1335.82, and palladium remained stable at $1129.37.
