Gold prices rose on Wednesday after data pointing to lackluster U.S. economic activity kept alive hopes of at least one interest rate cut this year.
Spot gold was up 0.1% at $2,330.23 per ounce as of 12:32 pm ET (1632 GMT). Most markets in the United States are closed for the Juneteenth holiday.
U.S. retail sales barely increased in May and data from the previous month were revised significantly lower, data showed on Tuesday, suggesting economic activity remained sluggish in the second quarter.
That slightly raised the odds of a Federal Reserve rate cut in September to 67% from 61% a day earlier, according to the CME’s FedWatch tool.
The main driver of gold price action remains the market’s expectation of the Fed’s monetary policy, and while prices are rising, the movement is fairly limited as the market awaits more substantive news, analyst Ricardo Evangelista said senior at ActivTrades.
Lower interest rates reduce the opportunity cost of holding unprofitable bullion.
“Market expectations point to at least a rate cut by the Fed. This scenario has been fully priced into the value of the dollar. Government purchases (of gold) also remain stable. So unless there is a significant change in this scenario, prices are expected to remain supported above the $2,300 level,” Evangelista said.
Gold prices rose about 1.3% late Friday on signs of cooling inflation in the United States amid a selloff in European stocks, with French stocks hit by political turmoil.
The political uncertainty surrounding Europe can be a positive as elections in France and the United Kingdom approach, said Carlo Alberto De Casa, market analyst at Kinesis Money.
The most immediate focus, however, is on weekly US jobless claims data on Thursday and flash Purchasing Managers’ Indexes on Friday.
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.
