Gold prices rose more than 1% on Thursday from the more than two-week low hit in the previous session, as the dollar weakened and the focus turned to key US inflation data for clues on the Federal Reserve policy.
US inflation data
Spot gold rose 1.2% to $2,324.53 an ounce by 18:04 GMT, after falling to its lowest level since June 10 on Wednesday. U.S. gold futures closed 1% higher at $2,336.6.
«Some of the data that came out was favorable for the gold market. Basically it was wholesale inventories that were lower than expected. The final GDP figure is significantly lower. Therefore, gold futures are getting a boost with the dollar index declining.said Phillip Streible, chief market strategist at Blue Line Futures.
Weakening economic momentum was highlighted by data showing business spending on equipment declined in May, while a drop in exports widened the goods trade deficit. In its third estimate of gross domestic product for the January-March quarter, the government confirmed that economic growth moderated sharply in the first quarter.
Making gold more attractive to holders of other currencies, the dollar weakened 0.2% against a basket of currencies, while 10-year Treasury bond yields fell to 4.2845%.
Expectations of interest rate cuts
According to LSEG FedWatch data, investors have largely maintained their view of around two interest rate cuts this year, even though the US central bank has projected just one.
Lower interest rates reduce the opportunity cost of holding non-interest-bearing gold bullion.
Personal consumption inflation data
Markets were also on alert for signs of Japanese authorities intervening in the yen, which was near a 38-year low. Economic uncertainty tends to increase the appeal of gold.
Spot platinum was down 2.2% at $988.75, while palladium was flat at $929.00 and silver was up 0.5% at $28.90..
