Gold (XAU/USD) emerged as a major beneficiary of the US Dollar (USD) weakness, a theme that is expected to drive prices on Thursday (6/12).
With prices currently hovering around the $3,380 mark, geopolitical risks and the US fundamental backdrop continue to support the safe-haven demand for Gold.
The US Producer Price Index (PPI) data release on Thursday showed that inflation slowed at the wholesale level. The headline PPI showed an annual increase of 2.6% in May, in line with analysts' forecasts, following a 2.5% increase in April. The core PPI, which excludes volatile items, fell to 3% in May, down from 3.2% in April.
Following Wednesday's surprise downside in the CPI figures, further confirmation that price pressures are easing could provide additional support to Gold as expectations for a September rate cut increase.
The threat of conflict in the Middle East escalated after reports that Israel was considering a military strike on Iran and Trump's latest tariff threats supported the precious metal, which has benefited from safe-haven inflows.
Additionally, NBC News reported, citing five people familiar with the matter, that Israel is considering taking military action against Iran in the coming days. At the same time, Trump confirmed on Wednesday that US personnel were being removed from parts of the Middle East due to rising tensions between Israel and Iran. This comes ahead of the sixth round of nuclear talks between the US and Iran, scheduled for later this week.
Recent headlines around trade have also added to the gloomy market mood. Trump has stated that the US will set its own terms for unilateral tariffs, overshadowing the optimistic narrative around the US-China "trade truce" announced on Wednesday.
Trump stated that "We will be sending out letters over the next few weeks to let them know what the deal is." These comments were reported by Bloomberg on Thursday. (alg)
Source: FXstreet
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