Spot gold rose 0.1% to $2,330.27 an ounce. The main driver of the gold price continues to be market expectations about the Federal Reserve’s monetary policy.
Reuters.- The price of gold rose on Wednesday after data pointing to weak economic activity in the United States kept hopes alive of at least one interest rate cut this year.
Spot gold was up 0.1% at $2,330.27 an ounce by 1156 GMT. In the previous session, prices had risen around 0.4%.
U.S. retail sales barely rose in May and the previous month’s figures were revised sharply downward, data showed on Tuesday, suggesting economic activity remained weak in the second quarter.
This slightly increased the odds that the Federal Reserve will cut rates in September, to 67% from 61% the previous day, CME’s FedWatch tool showed.
The main driver of the gold price continues to be market expectations about the Federal Reserve’s monetary policy and, despite the fact that prices rise, the movement is quite moderate, as the market awaits more substantial news, said Ricardo Evangelista , senior analyst at ActivTrades.
Lower interest rates reduce the opportunity cost of holding bullion, which does not earn interest.
“Market expectations point to at least one rate cut by the Federal Reserve. This scenario has been fully discounted in the value of the dollar. Public purchases (of gold) also remain stable. So, unless there is some significant change in this scenario, prices are expected to remain above the $2,300 level,” Evangelista said.
Among other precious metals, spot silver rose 0.1% to $29.54 an ounce, platinum gained 1.1% to $983.45 and palladium added 1.9% to $904.00 .
