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Gold Prices Increase as Concerns Over Fed Cut Support Decline

On Thursday, gold prices rose as fears of an early decrease in economic support subsided after data indicated that consumer price inflation in the United States slowed in July, sending the currency lower. Thus, gold prices increase as concerns over Fed cut support decline.

The prices of gold increased 0.1% in spot trading to $1753.90 per ounce, and gold is considered a hedge against inflation. However, the yellow metal is extremely susceptible to increasing US interest rates, which increases the opportunity cost of acquiring gold.

According to data released on Wednesday, consumer price increases in the United States eased in July but remained at a 13-year high on an annual basis.

Meanwhile, an increasing number of US central bank officials are debating how and when to begin eliminating large asset purchases during the pandemic.

Gold is used as an inflation hedge. However, the yellow metal is extremely sensitive to increasing US interest rates, which increases the opportunity cost of acquiring gold, which does not yield in returns, but rather strengthens the dollar.

In addition, the dollar index remained below its highest level in more than four months, which it attained on Wednesday. On the other hand, Silver lost 0.5 % to $23.41 per one ounce. Platinum declined 0.4 percent to $1013.23 per one ounce, while palladium climbed 0.1% to $2639.56 per one ounce