· Gold prices climbed to a week’s high on Thursday, supported by expectations for an interest rate cut by the U.S. Federal Reserve following soft inflation data, although an uptick in equities capped gains.
· Spot gold rose 0.5% to $1,340.13 per ounce, after touching its highest since June 7 at $1,344.60 earlier in the session.
U.S. gold futures settled up 0.5% at $1,343.70 an ounce.
· “The initial move on higher prices was due to escalating trade tensions ... Thereafter, concerns around recession or a slowing U.S. economy has helped push up rising expectations of a Fed interest rate cut in July,” said Suki Cooper, precious metals analyst at Standard Chartered Bank.
· Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
· Fed policymakers are scheduled to meet on June 18-19, with financial markets pricing in at least two rate cuts by year-end, after tepid consumer price data on Wednesday and employment data were seen as further indications the U.S. economy may be losing steam.
· “It (gold) found strong support around $1,320 earlier this week and has since burst higher with the previous peak around $1,350 in its view. A break of this could propel gold higher, although it will have to be matched with momentum,” Craig Erlam, senior market analyst with OANDA, said in a note.
“Risk appetite in the markets is likely to work against gold, but the dollar looking vulnerable is clearly supportive,” he wrote.
· Wall Street stocks opened higher on Thursday, helped by gains in energy shares after suspected attacks on two tankers off the coast of Iran boosted oil prices.
· Silver climbed 1.1% to $14.90 per ounce while platinum dipped 0.3% to $806.07.
· Palladium jumped 2.6% to $1,442.51 per ounce after hitting a more than six-week high of $1,447.26 earlier in the session.
“Even though auto sales globally are slowing, we are seeing palladium demand rise amid tighter emission regulations around the world,” said Standard Chartered’s Cooper.
Reference: CNBC
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