Gold prices experienced a rebound on Friday, September 15, 2023, following a three-week low earlier in the week. This recovery was spurred by U.S. inflation reports that indicated a re-acceleration of inflation in August, but not significant enough to cause immediate concern for the Federal Reserve or the market.
The U.S. dollar index DXY, which gauges the currency's strength against a basket of other currencies, was slightly down by 0.1% at 105.31 on Friday. After reaching its highest level in six months, the U.S. dollar took a pause, contributing to the strengthening of gold prices.
Market analysts highlighted that this minor weakening of the U.S. dollar aided gold's marginal increase on Friday. Given the inverse relationship between gold and the U.S. dollar - as gold is typically priced in dollars - a weaker dollar often leads to rising gold prices.
In parallel with these developments, the European Central Bank (ECB) signaled an end to its interest rate hikes on Thursday. The ECB had increased its deposit rate by 25 basis points, bringing it to 4%. This move indicates that Europe's central banking system is likely done with raising interest rates for now.
Despite the fluctuations throughout the week, gold is expected to conclude the week approximately at the same level it started. This stability mirrors recent data on U.S. consumer and producer prices confirming ongoing inflation, yet without triggering significant market or central bank alarm.
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