Meanwhile, Silver (XAG/USD) is trading at 91.09, showing +4.72% gains, supported by a weaker US dollar and growing expectations of Fed rate cuts.
Gold Gains as Weaker Dollar and Cooling US Inflation Boost Rate Cut Expectations
On the US front, the broad-based US dollar is showing some weakness after small gains in the previous session, trading around 99.10. This is helping gold, as a weaker dollar makes the metal cheaper for buyers using other currencies. These softer readings are supporting gold and silver while slightly weakening the US dollar, as markets price in a more dovish Fed outlook.
Gold is also getting support from growing expectations that the US Federal Reserve may cut interest rates later this year.
On the data front, the US Consumer Price Index (CPI) shows that inflation is cooling. Core CPI, which excludes food and energy, rose only 0.2% in December, below expectations, keeping annual core inflation at 2.6%, its lowest in four years. The headline CPI matched forecasts with a 0.3% monthly increase, bringing annual inflation to 2.7%. These softer readings are supporting gold and silver while slightly weakening the US dollar, as markets price in a more dovish Fed outlook.
Rising Geopolitical Tensions and Upcoming US Data Weigh on Market Sentiment
On the other hand, uncertainty is rising around the US central bank because of repeated threats from the Trump administration. Furthermore, in Iran, the situation is tense as security forces have cracked down on large protests, and hundreds of people have died, as per the latest report.
Moreover, the government has also cut off Internet access, making it hard to know exactly what is happening in Iran. Trump has warned that the US might step in if protesters are killed. This increased the tension in the sentiment.