Gold rose on Wednesday as expectations of a U.S. Federal Reserve interest rate cut in September gained traction following mild inflation data, while a weaker dollar bolstered demand.

Spot gold GOLD gained 0.6% to $3,363.61 per ounce by 1026 GMT. U.S. gold futures GOLD for December delivery rose 0.5% to $3,414.10.

“Market participants are starting to debate if the Fed will do a 50 basis point cut at its September meeting following the comments from U.S. Treasury Secretary Bessent yesterday, with a focus on incoming weaker U.S. economic data supporting that,” said UBS commodity analyst Giovanni Staunovo.

Markets are pricing in a more than 96% chance of a Fed rate cut next month, after July’s mild inflation bump signalled limited impact from U.S. import tariffs on consumer prices, with at least one additional reduction anticipated by year-end.

Gold, a non-yielding asset often viewed as a safe haven during times of economic or geopolitical uncertainties, typically benefits from a low-interest-rate environment.

The dollar index DXY hit a two-week low, making greenback-priced bullion more affordable for overseas buyers.

Europe and Ukrainian leaders will speak with U.S. President Donald Trump at a virtual meeting on Wednesday ahead of his summit with Russian President Vladimir Putin, as they try to drive home the perils of selling out Kyiv’s interests in pursuit of a ceasefire.

“Don’t expect those talks to meaningfully influence the gold market, (they) might trigger some short-term volatility. Near-term prices are likely to move sideways, until incoming U.S. economic (data) starts to support a faster (Fed) rate cut cycle,” Staunovo said.

Meanwhile, the U.S. and China extended their tariff truce by another 90 days, averting triple-digit duties on each other’s goods.

Spot silver XAGUSD1! rose 1.7% to $38.53 per ounce, platinum PL1! was up 0.7% at $1,345.89 and palladium XPDUSD1! gained 0.5% to $1,135.45.
Source: Reuters