Gold hovers near 8-month high on bets of weaker dollar

Gold is trading near an eight-month high on Wednesday as inventors expect the Fed to slow the pace of interest rate hikes and the greenback to further lose value. However, market participants are being cautious ahead of inflation data.

Precious metals outperformed at the beginning of the year. The prices have risen nearly 3% since last week on expectations of slower interest rate increases in the U.S. Fears about an upcoming global recession also cause gold demand to rise. 

Market participants are closely watching the U.S. inflation data. Inflation is likely to have cooled in December. Earlier, the job market report for December revealed that labor market activity had slowed down.

Slowing inflation and labor market activity resulted in increased expectations that the Fed will slow the pace of rate hikes. This will positively affect the metal markets that remained tight in 2022 amid Fed's aggressive rate hikes.