Gold traded higher on Wednesday following a batch of inflation data out of Europe that analysts said could push the European Central Bank to act more aggressively.
Gold futures for August
delivery rose $7.40, or 0.4%, to $1,828.70 per ounce.
for September delivery rose 13 cents, or 0.6%, to $20.99 per ounce.
for October delivery rose $21.50, or 2.4%, to $927.20 per ounce.
for September delivery rose $85, or 4.6%, to $1,947 per ounce.
Copper futures for September
delivery rose 2 cents, or 0.6%, to $3.80 per pound.
What analysts are saying
While the headline reading on German inflation declined in June for the first time since January, inflation data out of Spain showed price pressures accelerating at their fastest pace in decades. According to preliminary data released by German statistics office Destatis on Wednesday, consumer prices rose 7.6% year-over-year, lower than the 8% forecast by economists in a Wall Street Journal poll. In Spain, the annualized inflation rate in June topped 10%, the highest since 1985.
See: Canaria in the coal mine? Spanish inflation surges a shocking 10.2% to a 37-year high
Meanwhile, in the U.S., a final reading on first-quarter gross domestic product showed the economy contracted at a slightly faster clip than previously believed. the final reading showed the U.S. economy shrunk by 1.6%, compared with the 1.5% contraction reflected in the first revision.
Edward Moya, the senior market analyst at Oanda, said the inflation data out of Europe might push the ECB to raise interest rates more quickly than previously expected, helping to weaken the dollar and support gold.
“Gold is still stuck in a wide trading range, but a collapse below the $1800 seems less likely as the dollar peak might be in place,” Moya said.
The ICE U.S. Dollar Index
a measure of the dollar’s strength against a basket of rivals, was essentially flat at 104.50.