Gold prices reached a two-week high on Wednesday, buoyed by geopolitical tensions as focus turns to the U.S. CPI data for clues on future monetary policy.
By 3:25 pm AEDT (4:25 am GMT) spot gold rose remained little changed at US$2,694.64 per ounce.
The U.S. Consumer Price Index (CPI) for November is expected to show a 0.3% increase, potentially setting the stage for a Federal Reserve rate cut at its 18 December meeting. Analysts suggest this may further bolster gold prices.
The CME FedWatch Tool indicates an 86.6% likelihood of a 25-basis-point rate cut in December, with most economists forecasting a pause in January amid inflationary concerns.
Geopolitical tensions also added to gold’s appeal. The Israeli military reported strikes on strategic weapons depots in Syria, while South Korean police conducted a high-profile raid on the presidential office over martial law allegations, according to Yonhap News Agency.
Gold thrives in environments of economic and geopolitical uncertainty, further benefiting from low interest rates that reduce the opportunity cost of holding the non-yielding asset.