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Gold June 19, 2024 01:20:56 PM

Gold Gains Traction on Weak U.S. Economic Data

Paul Ploumis
ScrapMonster Author
Spot gold was up 0.2% at $2,332.09 per ounce as of 0852 GMT. U.S. gold futures were steady at $2,346.80.

Gold Gains Traction on Weak U.S. Economic Data

SEATTLE (Scrap Monster): Gold prices edged up on Wednesday after data suggesting lacklustre U.S. economic activity kept alive hopes for at least one interest rate cut this year.

Spot gold was up 0.2% at $2,332.09 per ounce as of 0852 GMT. U.S. gold futures were steady at $2,346.80.

U.S. retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed on Tuesday, suggesting economic activity remained lacklustre in the second quarter.

That slightly boosted the odds of a Federal Reserve rate cut in September to 67%, from 61% a day earlier, the CME FedWatch tool showed.

The main drive for gold's price action remains the market expectations over the Fed's monetary policy and despite prices creeping up, the move is quite subdued as the market waits for more substantial news, said Ricardo Evangelista, senior analyst at ActivTrades.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"Market expectations point to at least one rate cut from the Fed. That scenario is fully priced in the value of the dollar. Government purchases (of gold) remain stable as well. So unless there is any significant change in this scenario, prices are expected to remain supported above the $2,300 level," Evangelista said.

Gold prices rose about 1.3% last Friday on signs of inflation cooling in the U.S. amid a selloff across European equities as French stocks were battered by political turmoil.

Political uncertainty surrounding Europe can be a positive, with elections in France and the UK nearing, Kinesis Money market analyst Carlo Alberto De Casa said.

The more immediate focus, however, is on the U.S. weekly jobless claims data on Thursday and flash purchasing managers' indexes on Friday.

Spot silver was up 0.1% at $29.54 per ounce, platinum rose 0.7% to $978.99 and palladium gained 1.7% to $902.20.

 Courtesy: www.reuters.com

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