By: Economy Middle East

Gold prices extended gains for a third consecutive session on Wednesday, supported by a weaker U.S. dollar and falling oil prices, as investors looked ahead to upcoming U.S. employment data for further signals on the Federal Reserve’s interest-rate path.

As of 5:38 GMT, spot gold climbed 1.75 percent to $4,148.93 an ounce, marking its highest level in two weeks, while U.S. gold futures advanced 1.39 percent to $4,210.35.

In the UAE, gold rates also extended their rise, with 24-carat gold rising AED6.25 to AED498.5 and 22-carat gold gaining AED5.75 to AED461.5.

In addition, 21-carat gold rose AED5.5 to AED442.5 and 18-carat gold ticked up AED4.5 to AED379.25.

Meanwhile, 14-carat gold rose AED3.5 to AED295.75.

Softer dollar supports gold’s rally

Gold prices rose as a softer dollar boosted demand for the precious metal by making dollar-denominated gold more affordable for buyers using other currencies. The U.S. dollar index, which tracks the greenback against a basket of six major currencies, fell 0.02 percent to 99.84.

Meanwhile, oil prices extended their losses after posting sharp declines over the previous two sessions, helping to ease inflation concerns that have supported expectations of higher interest rates.

Market sentiment was also influenced by developments in the Middle East, with Qatar saying mediators were making progress toward ending the U.S.-Iran conflict, although Tehran rejected U.S. President Donald Trump’s claim that negotiations were already underway.

In turn, traders lowered their expectations for a Federal Reserve rate hike in September, with markets pricing in a 59 percent chance of an increase, down from 67 percent a day earlier.

Although gold is widely viewed as a hedge against inflation, higher interest rates typically weigh on the non-yielding metal by increasing the appeal of interest-bearing assets.

Investors await ADP private employment report

Federal Reserve Bank of Philadelphia President Anna Paulson said she remained open-minded about the monetary policy outlook, noting that conditions could still warrant further rate increases.

Investors are now awaiting the ADP private employment report due later on Wednesday, followed by the closely watched U.S. nonfarm payrolls report on Friday, for fresh clues on the Fed’s policy direction.

Other precious metals

As gold prices rose, other precious metals edged higher. Spot silver rose 2 percent to $60.70 per ounce, while platinum gained 1 percent to $1,751.03 after touching its highest level since mid-June. Palladium also advanced 0.5 percent to $1,360.25, reaching a two-month high.