As of 10:18 a.m. EDT (1418 GMT), spot gold was up 0.2% to $1,960.20 per ounce, its best since June 16. Futures on the yellow metal in America gained 0.1%, to $1,963.

Gold became more inexpensive for international customers as the dollar index hit its lowest level in more than a year. With benchmark U.S. yields at their lowest in more than a week, the opportunity cost of owning gold, which generates no income, is lower than it has been in recent years. [US/][USD/]

The gold market had a sharp upswing in response to yesterday’s report. “We are chewing through a lot of different resistance points,” said Phillip Streible, chief market analyst at Blue Line Futures in Chicago, “but gold has a good shot, if it can get another catalyst to push up to the $2,000 mark.”

U.S. producer prices increased only slightly in June, according to data released on Thursday, adding to mounting evidence that the economy has entered a disinflationary period.

This comes following yesterday’s report that consumer prices in the United States increased slightly in June, marking the smallest annual gain in more than two years as inflation remained low.

The market is now anticipating a smaller increase than before. Gold’s price rise mirrors this correction, according to a note from Commerzbank.

Market interest rate futures indicate that investors expect the Federal Open Market Committee (FOMC) to raise rates again later this month, though they are less optimistic about further increases.

Holding non-yielding bullion increases in opportunity cost when interest rates rise.

Meanwhile, the surprise drop in new claims for unemployment benefits last week in the United States is a sign that the labour market is still tight.

Price per ounce of palladium increased 0.9% to $1,294.22, while platinum surged 2.7% to $971.75.

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