Investing.com - Gold prices were trading close to their highest level in a week on Thursday as weak U.S. inflation data weighed on the dollar and raised hopes that the Federal Reserve would hold off hiking interest rates.
U.S. gold futures for December delivery were at $1,118.3 an ounce, not far from overnight highs of $1,122.4.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.18% to 95.33.
The dollar remained under pressure ahead of the conclusion of the closely watched Fed policy setting meeting later in the day amid uncertainty over whether the central bank would hike short term interest rates for the first time in almost a decade.
An increase in interest rates would boost the greenback by making it more attractive to yield-seeking investors, while weighing on gold which doesn’t yield interest.
The dollar eased against the other major currencies on Wednesday after data showing that U.S. inflation unexpectedly fell for the first time in seven months in August tempered expectations for a rate hike.
The Labor Department said the consumer price index dipped 0.1% last month after a 0.1% increase in July.
Fed Chair Janet Yellen has said that an interest rate increase is data dependent but has also indicated that she expects to begin raising rates before the end of the year.
Elsewhere in metals trading, U.S. silver futures for December delivery were down 0.24% to $14.85 an ounce. Copper for December delivery lost 0.62% to trade at $2.437 a pound.