Gold prices rallied Thursday as weak U.S. economic activity fueled expectations of an interest rate cut by the Federal Reserve this year.
FUNDAMENTALS
* Spot gold was up 0.2% at $2,331.38 per ounce as of 0126 GMT. U.S. gold futures fell 0.1% to $2,345.00.
* With recent data showing moderation in labor market and pricing pressures, the US Fed is looking for further confirmation that inflation is cooling as it heads cautiously towards what many expect to be a cut or two in interest rates by the end of the year.
* 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.
* Investors are now focused on weekly jobless claims expected at 1230 GMT and Friday’s flash purchasing managers’ indexes, which could offer more clarity on consumption and economic strength.
* Chicago Federal Reserve President Austan Goolsbee on Tuesday called the latest reading of consumer price inflation “excellent” and said he sees the potential for inflation to cool further this year.
* Traders are currently pricing in about a 66% 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.
* Elsewhere, Britain’s central bank looks set to keep interest rates at a 16-year high of 5.25% as underlying inflationary pressures prove persistent.
* Spot silver rose 0.5% to $29.91 an ounce, platinum fell 0.2% to $978.42 and palladium lost 0.2% to $903.25 .
DATA/EVENTS (GMT) 0115 China Loan Prime Rate 1Y, 5Y June 1100 UK BOE Bank Rate June 1230 US Housing Starts Number May 1230 US Initial Jobless Clm Weekly 1230 US Philly Fed Business Indx June 1400 EU Consumer Confid. Flash June (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips)
