Gold prices climbed over 1 per cent on Thursday, rebounding from a more than two-week low reached in the previous session, as the dollar weakened and attention turned to key U.S. inflation data for insights into the Federal Reserve’s policy direction.
As of 1804 GMT, spot gold had increased by 1.2 per cent to $2,324.53 per ounce, after hitting its lowest level since June 10 on Wednesday. U.S. gold futures settled 1 per cent higher at $2,336.60.
“Gold prices rebounded from its two-week low as the dollar softened amid mixed economic numbers from US. GDP numbers indicated moderation in the economic activity during the 1st quarter of 2024. Further, gradual rise in weekly unemployment rate also supported the bullions to regain their strength as it increased the bets of interest rate cut in the 2nd half of the year,” said ICICI Direct Research in a report.
What’s weighing on gold prices?
The slowdown in economic momentum was highlighted by data showing a decline in business spending on equipment in May and a slump in exports, which increased the goods trade deficit. The government’s third estimate of GDP for the January to March quarter confirmed that economic growth had slowed significantly in the first quarter.
Making gold more attractive to holders of other currencies, the dollar weakened by 0.2% against a basket of currencies, while benchmark 10-year yields fell to 4.2845%.
According to LSEG’s FedWatch data, investors continue to expect around two interest-rate cuts this year, despite the U.S. central bank projecting only one. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Data for the Personal Consumption Expenditures Price Index (CPE), the Fed’s preferred inflation gauge, is due on Friday.
Markets were also alert for potential intervention by Japanese authorities as the yen languished near a 38-year low. Economic uncertainty tends to boost the appeal of bullion.
Spot platinum fell by 2.2% to $988.75, while palladium remained steady at $929.00, and silver gained 0.5% to $28.90.
