Gold rises as weaker US data fuels bets on Fed rate cut

Gold rises as weaker US data fuels bets on Fed rate cut
Gold rises as weaker US data fuels bets on Fed rate cut

Gold prices rose on Tuesday after softer-than-expected U.S. retail sales data boosted hopes that the Federal Reserve will cut interest rates this year, sending the dollar and Treasury yields lower .

Spot gold was up 0.2% at $2,323.96 per ounce at 09:54 am ET (1354 GMT). U.S. gold futures rose 0.4% to $2,338.60.

“Weaker-than-expected retail sales data has pushed the dollar lower and at the same time, yields have pulled away, so this is providing some upside to gold prices,” said Daniel Pavilonis, strategist at senior market at RJO Futures.

U.S. retail sales rose 0.1% last month, the Commerce Department’s Census Bureau said. Economists polled by Reuters had forecast retail sales rising 0.3% in May.

Fed Bank of New York President John Williams said interest rates would gradually decline over time, but declined to say when the central bank might begin easing monetary policy.

Traders are currently pricing in about a 67% chance of a Fed rate cut in September, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding unprofitable bullion.

Gold prices are down 6% from an all-time high of $2,449.89 an ounce hit on May 20, amid a rally that has come against traditional headwinds such as a strong dollar and highs interest rates.

In key gold demand categories, the Chinese central bank’s pause in May gold purchases continued to weigh on the market.

However, an annual survey of central banks conducted by the World Gold Council (WGC) recorded the highest share of respondents who said they expected their gold reserves to increase within 12 months.

Spot silver fell 0.2% to $29.43 an ounce. However, Nitesh Shah, commodities strategist at WisdomTree, expects the metal to receive support in the coming months from the market’s deepening structural deficit this year, amid growth in the use of solar panels.

Platinum gained 0.9% to $973.60 and palladium slipped 0.8% to $881.35.

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