Gold prices rose in Thursday's trading session (June 11), recovering from a 6-month low, as investors finalized short-selling positions. However, concerns about higher inflation and interest rates in the US continued to limit the upward momentum of the precious metal.
Spot gold price increased 0.6%, to 4,097.01 USD/ounce.
Meanwhile, US gold futures for August delivery fell 0.4% to 4,118 USD/ounce.
Gold prices are clearly in a state of significant oversold. The current issue is whether this is a real recovery or simply profit-taking from short-selling positions" - independent analyst Ross Norman said.
In geopolitics, the US and Iran continue to have back-and-forth attacks for the second consecutive day. US President Donald Trump declared that he would continue the attacks if Tehran does not immediately agree to a peace agreement.
Spot gold prices have fallen more than 22% since the war between the US-Israel and Iran broke out at the end of February, dragging down oil prices.
Raw oil prices maintaining at a high level can increase inflationary pressure and make interest rates at a higher level for a longer time. Although gold is often seen as an inflation hedging tool, high interest rates tend to put pressure on precious metals.
Data released on Wednesday showed that consumer inflation in the US in May increased at the fastest rate in 3 years, mainly due to the sharp increase in prices of energy-related products.
The US Federal Reserve (Fed) is forecast to keep interest rates unchanged in the first meeting chaired by Kevin Warsh as Fed Chairman next week. Most economists in Reuters' survey believe that interest rates will not change this year.
However, according to CME Group's FedWatch tool, traders currently value 67% of the Fed's ability to raise interest rates in December.
The market is now almost certain that the Fed will raise interest rates before the end of this year," commented Commerzbank analyst Carsten Fritsch. "If next week's meeting does not signal an upcoming interest rate hike, gold prices may begin to recover.
Investors are currently awaiting the May producer price index report, expected to be released at 12:30 GMT, to further assess the monetary policy orientation of the Fed.
On other precious metals markets, spot silver prices increased 1.3%, to 64.49 USD/ounce; Platinum increased 0.8%, to 1,678.08 USD/ounce; palladium increased 3%, to 1,249.58 USD/ounce.
