Gaza truce hopes slim
Fed’s Williams says 2% inflation target ‘critical’
Perth Mint’s April gold sales jump two-fold m/m/
Rewrites, adds analyst comments, updates prices
By Ashitha Shivaprasad
May 6 (Reuters) –Gold prices signed on Monday as expectations that the Federal Reserve will start cutting interest rates later in the year and tensions in the Middle East boosted the allure of the non-yielding bullion.
spot gold XAU= rose 0.4% at $2,310.89 per ounce, as of 0244 GMT. US gold futures GCcv1 gained 0.6% to $2,322.30 per ounce.
Prospects for a Gaza ceasefire appeared slim on Sunday as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.
Gold will “remain to geopolitical developments, with any sensitive breakdown of the ceasefire agreement potentially translating to another move higher in price,” said IG market strategist Yeap Jun Rong.
Also, “weaker US data offer more policy flexibility for the Fed in terms of rate cuts,” helping bullion, he added.
Data on Friday showed that US job growth slowed more than expected in April, reinforcing expectations that the Fed will start cutting interest rates later this year. The Institute for Supply Management (ISM) said its non-manufacturing PMI fell to 49.4 from 51.4 in March.
Markets are pricing a 67% chance of a US rate cut in September, as per CME’s FedWatch Tool. Lower interest rates reduce the opportunity cost of holding bullion.
Fed Bank President John Williams said on Friday that the 2% target for inflation is “critical” to the Fed’sefforts to achieve price stability, while Austan Goolsbeepresident of the Chicago Fed, noted that US rate-path “dot plot” needs more context.
The Perth Mint’s gold product sales in April jumped two-fold, while silver sales fell to their lowest level since December, the refiner said.
Spot silver XAG= was up 1.4% to $26.91 per ounce.
Platinum XPT= lost nearly 0.7% to $948.78 and palladium XPD= inched down 0.2% to $944.05.
Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman
