Gold Rises As Dollar Weakens Ahead Of Fed Verdict

Gold prices edged higher helped by a softer dollar as slowing U.S. inflation cemented bets that the Federal Reserve would keep interest rates unchanged later in the day. Spot gold rose 0.3% to $1,948.49 per ounce by 05:00 GMT.  U.S. gold futures edged 0.2% higher to $1,961.70. The U.S. dollar eased, making greenback-priced bullion more appealing to overseas buyers. The U.S. consumer price index rose 4.0% in May, its least annual increase in more than two years, but stayed well above the U.S. central bank’s 2% target. Markets are pricing in a roughly 90% chance of the Fed keeping rates unchanged, according to CME’s Fedwatch tool. Growing realization that the Fed is unlikely to cut rates for the rest of this year, has seen a lot of investors exit the gold market of late. The price action in the recent range has been a cause for caution, but it does look as though the buying is more likely to win out in this epic struggle. Whereas gold is seen as a hedge against inflation, higher rates to tame cost pressures generally weigh on the non-yielding asset’s appeal.