Spot gold rises 0.6% to $2,341.15 per ounce amidst softer U.S. economic data and rate cut expectations
Gold prices reached a two-week high on Thursday as weaker U.S. economic data fueled expectations of interest rate cuts by the Federal Reserve this year.
As of 0512 GMT, spot gold increased by 0.6% to $2,341.15 per ounce, having hit its highest level since June 7 earlier in the session. U.S. gold futures also saw a rise of 0.4%, settling at $2,355.10.
“I am still favouring moves to the upside for the gold market in light of where we currently stand on the interest rate curve, which is at the peak,” commented Tim Waterer, chief market analyst at KCM Trade. “The gold market seems content to consolidate recent gains rather than reach higher at this stage, at least until we see some further evidence of softening U.S. macro data, which could alter the interest rate outlook.”
Recent data highlighted a moderation in the labor market and price pressures, with Tuesday’s soft retail sales data suggesting lackluster economic activity in the second quarter. The Federal Reserve is cautiously monitoring these indicators, seeking further confirmation that inflation is cooling, leading to broad expectations of rate cuts by the end of the year.
Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.
“Mixed comments from Fed officials could inject volatility in the short term. We hold a positive view for gold with a price target of $2,500 per ounce by the end of 2024,” ANZ analysts stated in a note.
The immediate market focus is on the U.S. weekly jobless claims data, due at 1230 GMT, and the flash purchasing managers’ indexes scheduled for release on Friday.
In other precious metals, spot silver rose 2.2% to $30.40 per ounce, platinum increased by 0.5% to $985.10, and palladium gained 0.7% to $911.14.
