WASHINGTON (dpa-AFX) - Gold prices touched a seven-month high amidst a general weakness in the Dollar and hopes of a dovish pivot by the Federal Reserve. Rate cut hopes were renewed after recent consumer price inflation readings in the U.S. showed a flat reading. The expected dip in the PCE-based inflation readings also supported sentiment for the yellow metal.
The Dollar Index, a measure of the Dollar's relative strength dropped 0.20 percent to 102.99 from the previous close of 103.20. The index had traded between 102.97 and 103.32 during the day and between 99.58 and 107.35 in the past 52 weeks. Dollar's weakness was driven by waning safe haven demand and expectations of a softening in the PCE-based inflation readings.
Data to be released on Thursday is expected to show the year-on-year PCE Price Index falling to 3 percent, from 3.4 percent in the previous month. The core component of the same is also seen declining to 3.5 percent, from 3.7 percent in the previous month. The month-on-month PCE price index is seen dropping to 0.1 percent, from 0.4 percent in the previous month. The core component of the same is also seen reducing to 0.2 percent, from 0.3 percent in the previous period.
The expected softening in the PCE readings, often considered as the Fed's preferred inflation gauge is seen goading the Fed to cut down on interest rates. The decrease in interest rates is seen as positive for gold as it reduces the opportunity cost of holding the non-interest-bearing asset.
Amidst the expectations, Gold Futures for December settlement rallied 0.77 percent to trade at $2,027.85. The day's trading range has been between $2,011.95 and $2,028.15. The 52-week trading range was between $1,752.9 and $2,085.40.
Spot Gold gained 0.66 percent to trade at $2,027.60 per troy ounce. The day's trading range has been between $2,011.76 and $2,027.91. The 52-week trading range was between $1,738.98 and $2,080.72.
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