As predictions that the Federal Reserve will start reducing rates grew in response to less-than-expected U.S. consumer inflation statistics, gold prices increased in Asian trade on Thursday and remained near record highs. Better risk appetite also restrained gains in the yellow metal, and traders were positioning for a more modest rate decrease in September due to a monthly uptick in the consumer price index inflation.
Gold futures increased 0.4% to $2,490.40 an ounce, while spot gold increased 0.2% to $2,452.56. Gold is nearing a new high, with a focus on September rates. This week, spot gold prices nearly reached a record high of $2,480 due to growing demand for safe-haven assets amid escalating geopolitical concerns in the Middle East.
However, gold had initially shown a negative response to the CPI data on Wednesday, as traders were leaning towards a lower, 25 basis point reduction by the Fed in September due to a month-over-month increase in inflation, according to CME Fedwatch.
The tool had previously shown that traders were divided between a 25 bps cut and a 50 bps cut, with the latter offering a metal market view that was more favorable. On Thursday, other precious metals saw gains as well. Silver futures increased 1.6% to $27.773 an ounce, while platinum futures increased 0.5% to $935.65 an ounce.
