Spot gold climbed Thursday, driven by rising US-Iran tensions and softer US inflation data, which fueled expectations of Federal Reserve rate cuts. The US ordered embassy staff to leave Baghdad after Iran warned it might attack US bases if nuclear talks fail. Meanwhile, the US Dollar Index fell to a two-month low, making gold more attractive to holders of other currencies.
US consumer prices rose 0.1% in May, down from 0.2% in April, with annual inflation edging up to 2.4% from 2.3%, partly due to lower gasoline costs, according to the Labor Department. Analysts, however, expect inflation to pick up later in the year due to the delayed effects of Trump administration tariffs. So far, price increases have been limited by existing stockpiles.
Markets now factor in about 50 basis points of Fed rate cuts by year-end. Investors await upcoming US producer inflation data for further insight into economic trends and monetary policy.
On trade, President Trump announced a deal to revive the US-China tariff truce, following agreements on tariff frameworks.
Spot gold last traded 0.33% higher at $1,366.30 per ounce.
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