BENGALURU: Gold prices jumped more than 1% on Thursday to break above the $2,400 per ounce level after data showed US consumer prices unexpectedly slipped last month, boosting bets for interest rate cuts by the Federal Reserve.
Spot gold was up 1.5% at $2,407.35 per ounce by 10:34 a.m. ET (1434 GMT), its highest since May 22. US gold futures rose 1.4% to $2,412.70.
“Gold surges above $2,400 as the friendly CPI number nearly cements a September rate cut. Gold bulls are likely to push for a new all-time high perhaps as soon as next week,” said Tai Wong, a New York-based independent metals trader. Spot gold prices hit a record high of $2,449.89 per ounce on May 20.
US consumer prices unexpectedly fell and the annual increase was the smallest in a year, reinforcing views that the disinflation trend was back on track and drawing the Fed another step closer to cutting interest rates.
Interest-rate futures prices reflected about an 85% chance of a rate cut at the Fed’s September meeting, compared with about a 70% chance seen before the data.
Non-yielding bullion’s appeal tends to shine when interest rates fall. Following the US inflation data, the dollar dropped to a more than one-month low, making gold more attractive for other currency holders, while the benchmark US 10-year Treasury yield fell to a four-month low.
Fed Chair Jerome Powell, over his two days of commentary before the Senate and House committees that oversee the central bank, indicated the Fed was edging closer to a rate cut decision.
“Given the overall trajectory on monetary policy and gold demand I think the bull run is not over yet,” said Zain Vawda, market analyst at MarketPulse by OANDA.
Comments
Comments are closed.