Gold strengthened on Wednesday (July 16th) on a weaker dollar, while investors awaited further clarity on trade talks between the US and its trading partners, with fresh inflation data due to provide further direction on the US Federal Reserve's policy outlook.

Spot gold rose 0.6% to $3,341.29 per ounce, as of 09:10 GMT. US gold futures edged up 0.3% to $3,348.20. The US dollar (.DXY), opens a new tab, fell 0.1%, making gold cheaper for buyers holding other currencies.

"The dollar is currently weakening ahead of the US PPI data as traders are taking a cautious stance after the recent uptick, which has given gold a bit of a boost," said Ross Norman, an independent analyst. On the data front, US consumer prices saw their highest increase in five months in June amid rising costs for some goods, signaling rising inflation and a possible delay in the Fed's planned interest rate cut until September.

The spotlight now turns to US producer price index (PPI) data, due at 12:30 GMT. On the trade front, President Donald Trump said on Tuesday that the US would impose a 19% tariff on goods from Indonesia under a new agreement with the Southeast Asian nation and that more agreements would be reached soon, while also providing new details on planned tariffs on pharmaceutical products.

The agreement with Indonesia is one of the few agreements reached so far by the Trump administration ahead of the August 1 deadline when tariffs on most US imports will rise again. However, the gold market has repeatedly rejected the $3,400 level despite Trump's new tariff updates, said Ajay Kedia, director of Mumbai-based Kedia Commodities.

Gold, traditionally considered a hedge against economic and political uncertainty, thrives in low interest rates. "In the short term, gold prices are likely to consolidate before continuing their rally towards $3,600/oz by year-end," ANZ said in a note. Elsewhere, spot silver rose 0.8% to $38.01 per oz. Platinum rose 0.4% to $1,377.85, while palladium fell 0.8% to $1,196.14. (alg)

Source: Reuters