Gold gains as Fed rate cut expectations provide support

By Eileen Soreng (Reuters) - Gold prices climbed to a week's high on Thursday, supported by expectations for an interest rate cut by the U.S. Federal Reserve following soft inflation data, although an uptick in equities capped gains.

Reuters June 14, 2019 01:06:37 IST
Gold gains as Fed rate cut expectations provide support

Gold gains as Fed rate cut expectations provide support

By Eileen Soreng

(Reuters) - Gold prices climbed to a week's high on Thursday, supported by expectations for an interest rate cut by the U.S. Federal Reserve following soft inflation data, although an uptick in equities capped gains.

Spot gold rose 0.5% to $1,340.13 per ounce as of 1:32 p.m. EDT (1732 GMT), after touching its highest since June 7 at $1,344.60 earlier in the session.

U.S. gold futures settled up 0.5% at $1,343.70 an ounce.

"The initial move on higher prices was due to escalating trade tensions ... Thereafter, concerns around recession or a slowing U.S. economy has helped push up rising expectations of a Fed interest rate cut in July," said Suki Cooper, precious metals analyst at Standard Chartered Bank.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Fed policymakers are scheduled to meet on June 18-19, with financial markets pricing in at least two rate cuts by year-end, after tepid consumer price data on Wednesday and employment data were seen as further indications the U.S. economy may be losing steam.

"It (gold) found strong support around $1,320 earlier this week and has since burst higher with the previous peak around $1,350 in its view. A break of this could propel gold higher, although it will have to be matched with momentum," Craig Erlam, senior market analyst with OANDA, said in a note.

"Risk appetite in the markets is likely to work against gold, but the dollar looking vulnerable is clearly supportive," he wrote.

Wall Street stocks opened higher on Thursday, helped by gains in energy shares after suspected attacks on two tankers off the coast of Iran boosted oil prices.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes on Wednesday from 756.18 tonnes on Tuesday.

Silver climbed 1.1% to $14.90 per ounce while platinum dipped 0.3% to $806.07.

Palladium jumped 2.6% to $1,442.51 per ounce after hitting a more than six-week high of $1,447.26 earlier in the session.

"Even though auto sales globally are slowing, we are seeing palladium demand rise amid tighter emission regulations around the world," said Standard Chartered's Cooper.

(Reporting by Eileen Soreng; additional reporting by Karthika Namboothiri and Diti Pujara in Bengaluru; editing by Dan Grebler and G Crosse)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.