The price of gold increased by another 0.35% after rising by 0.4% yesterday. The catalyst for the upward trend is the weakening of the US currency and a drop in the yield of US Treasury bonds. At the same time, investors are refraining from opening large positions ahead of the publication of the US CPI report.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.24% to 101.39. Meanwhile, the yield on 10-year US bonds fell by 3.4 basis points to 3.61%.
US CPI data for August will be released at 12:30 GMT, and according to forecasts, the overall CPI increased by 0.2% on a monthly basis, which will lead to a decrease in the annual rate to 2.6% (the lowest value since March 2021). Experts said that if the inflation data turns out to be below expectations, this could give a boost to gold. Overall, today's report is likely to play a key role in determining the size of the Fed's rate cut next week. According to the CME FedWatch Tool, markets see a 35% probability of a 0.5% rate cut in September (down from 44% the week before), and a 65% probability of a 0.25% rate cut (up from 56% the week before). A low interest rate environment tends to boost non-yielding bullion's appeal.