Precious Metals Afternoon: Gold Rises for Second Consecutive Day on Weaker Dollar and Easing Inflation

Gold rose on Thursday (30th) as the U.S. dollar weakened and inflation showed signs of easing. Federal Reserve (Fed) Chair Kevin Warsh did not provide clear policy guidance during the post-decision press conference, leading traders to scale back rate hike expectations.

Spot gold climbed 1%, reaching $4,104.59 per ounce.

August-delivery gold futures settled 1.6% higher at $4,160.60 per ounce.

The U.S. dollar declined 0.8%, while the Japanese yen surged 0.8%. Traders remain cautious about potential intervention by the Japanese government. A weaker dollar makes dollar-denominated gold cheaper for overseas buyers.

The U.S. Commerce Department reported Thursday that the June Personal Consumption Expenditures (PCE) price index fell 0.1%, in line with market expectations. However, given renewed Middle East tensions pushing up oil prices, the current disinflation may be temporary.

Bart Melek, Global Head of Commodity Strategy at TD Securities, said the PCE data looked "slightly better than expected, and the current inflation environment is broadly stable."

He added: "The Middle East conflict doesn't appear to be ending soon, so inflationary pressures that eased over recent months could re-escalate. The market broadly believes central banks will eventually respond, which is a key factor supporting gold’s break above the $4,150–$4,200 resistance zone."

The Fed held interest rates steady on Wednesday. After the policy statement, Warsh reiterated the Fed’s commitment to bringing inflation down but did not specify what actions would be taken, leaving investors confused about the policy path. Spot gold briefly rose about 2% following the decision announcement.

According to CME’s FedWatch tool, traders now estimate a 61% chance of a rate hike at the September 15–16 meeting, down from about 77% before the decision.

Gold does not yield interest, so if investors expect high rates to persist for an extended period, it typically reduces gold’s appeal.

On the other hand, the latest U.S. government data showed that last week’s initial jobless claims rose less than expected, indicating the labor market remains resilient.

Other precious metals:

- Spot silver rose 2% to $58.79 per ounce. - Spot platinum gained 2.5% to $1,652.32 per ounce. - Spot palladium climbed 4.4% to $1,301.39 per ounce.