Gold prices surged on Thursday, June 12, as investors flocked to the precious metal amid escalating tensions in the Middle East and a weakening US dollar. Softer inflation data in the US also fueled speculation that the Federal Reserve might implement a rate cut in the near future.
Spot gold rose by 0.7%, reaching $3,375.06 per ounce in early trading, while US gold futures climbed 1.5%, hitting $3,395 per ounce. In India, the price of 24-karat gold reached ₹99,280 per 10 grams, with the 22-karat and 18-karat variants priced at ₹91,000 and ₹74,460 per 10 grams, respectively, according to Goodreturns.
Dollar Weakness and Inflation Data Drive Gold’s Momentum
The US dollar weakened, with the dollar index falling to a two-month low, making gold more attractive to international buyers. The latest US Consumer Price Index (CPI) data showed a smaller-than-expected 0.1% increase in May, compared to the anticipated 0.2% rise. Year-on-year inflation stood at 2.5%, further boosting expectations of a dovish monetary policy from the Federal Reserve.
Manav Modi, Senior Analyst at Motilal Oswal Financial Services, commented, “Markets are now pricing in a 68% probability of a Fed rate cut by September, which has tilted sentiment in favor of gold.”
Geopolitical Tensions Fuel Safe-Haven Demand
Geopolitical risks, particularly in the Middle East, also contributed to gold’s appeal as a safe-haven asset. US President Donald Trump announced the relocation of personnel from the region amid rising tensions with Iran, while Israel’s potential military actions further unsettled global markets.
Aksha Kamboj, Vice President of the India Bullion and Jewellers Association, highlighted the role of geopolitical uncertainty in driving demand for gold. “Concerns over US-Iran relations and unresolved issues in the US-China trade agreement have increased demand for gold. Central banks are also continuing to accumulate gold as a key reserve asset, providing additional support for prices,” Kamboj noted.
Outlook: Gold Likely to Remain Strong Amid Global Risks
As global risks remain in focus, analysts expect gold to stay firm in the coming days. With US Producer Price Index (PPI) data set to be released later today, traders are closely monitoring key economic indicators. Technical analysis suggests that gold could see further gains if it holds above key resistance levels, keeping bullish sentiment intact.
As geopolitical tensions and economic uncertainty continue to drive investor demand, gold’s status as a safe-haven asset looks poised to remain robust.
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