Why is gold price rising today? Gold prices move higher as markets assess US inflation data and Federal Reserve rate expectations

Gold price is slowly climbing new heights on Wednesday. The precious metal is still set for a monthly decline. Investors are currently waiting for US inflation data to get clues on the possibility for Federal Reserve rate hikes.

Gold price today

Spot gold is up by 0.2% to reach $4,188.17 an ounce, as of 0920 GMT. US gold futures also jumped 1% to $4,219.90. The dollar, which is lower on the day, is still on track for a monthly gain. A stronger dollar makes gold more costlier for holders of other currencies.


Gold is also reeling under pressure this month due to the expectations of another rise in US interest rates. Giovanni Staunovo, analyst, UBS, said, "Higher oil prices and the increased probability of further US rate hikes being priced in by market participants are the main drivers behind gold's recent weakness."

Fed rate hike expectations trouble gold

As gold does not offer investors a yield, higher interest rates make the metal less attractive than other assets. “Gold is very sensitive to expectations around Fed hikes and statements from officials,” said Jamie Dutta, market analyst, Nemo.money.

Traders are currently expecting a 45% chance of a rate hike in October and an 89% chance of one in December, as per the CME FedWatch Tool. Investors are now looking forward to the release of the personal consumption expenditures (PCE) price index later today at 1230 GMT.

Earlier this month, the US central bank has also increased rates by a quarter percentage point. It also shows that additional hikes are most likely. Beth Hammack, chief, Cleveland Fed, said on Friday, that consistent high inflation risks can make the American public accept hiked prices as the norm. The central bank cannot let it happen. This week, a series of US economic releases are scheduled. These include ADP employment report, job openings, Personal Consumption Expenditures readings and nonfarm payrolls.