Gold prices rose on Wednesday after data suggesting lackluster US economic activity kept hopes alive for at least one interest rate cut this year.
Spot gold was up 0.1% at $2,330.23 per ounce at 12:32 pm ET (1632 GMT). Most US markets are closed for the June 1 holiday.
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 lackluster in the second quarter.
That slightly raised the odds of a Federal Reserve rate cut in September to 67% from 61% a day earlier, CME’s FedWatch tool showed.
The main driver of gold price action remains market expectations on the Fed’s monetary policy and despite prices creeping higher, the move is fairly muted as the market awaits 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 a rate cut by the Fed. That scenario has been fully priced into the value of the dollar. Government purchases (of gold) also remain stable. So, unless If there is any significant change in this scenario, prices are expected to remain above the $2,300 level,” Evangelista said.
Gold prices rose around 1.3% last Friday on signs of cooling inflation in the United States, amid a sell-off in European equities, as French stocks were hit by turmoil. policy.
The political uncertainty surrounding Europe can be positive, with the elections in France and the United Kingdom approaching, said Carlo Alberto De Casa, market analyst at Kinesis Money.
However, more immediate attention is focused on Thursday’s weekly US jobless claims data and Friday’s flash purchasing managers’ indices.
Spot silver rose 0.6% to $29.69 an ounce, platinum rose 0.8% to $977.49 and palladium gained 2.1% to $905.51.
