Gold rose on Wednesday as expectations of a US Federal Reserve interest rate cut in September gained traction following mild inflation data, while a weaker dollar bolstered demand.
Spot gold gained 0.6% to $3,363.61 per ounce by 1026 GMT. US gold futures 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 US Treasury Secretary Bessent yesterday, with a focus on incoming weaker US economic data supporting that," said UBS commodity analyst Giovanni Staunovo, Reuters reported.
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 US 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 hit a two-week low, making greenback-priced bullion more affordable for overseas buyers.
Europe and Ukrainian leaders will speak with US 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 US economic (data) starts to support a faster (Fed) rate cut cycle," Staunovo said.
Meanwhile, the US and China extended their tariff truce by another 90 days, averting triple-digit duties on each other's goods.
Spot silver rose 1.7% to $38.53 per ounce, platinum was up 0.7% at $1,345.89 and palladium gained 0.5% to $1,135.45.
