Gold climbs 1% to two-week high on increased Fed rate cut expectations; silver rises 2%

Gold prices surged over 1 per cent, reaching their highest level in two weeks, on T. This increase was fueled by recent U.S. economic data indicating a slowdown in the world’s largest economy, which heightened expectations of interest rate cuts by the Federal Reserve later this year.

At 10:04 a.m. ET (1404 GMT), spot gold climbed 1 per cent to $2,351.55 per ounce, marking its peak since June 7. Meanwhile, U.S. gold futures advanced 0.8 per cent to $2,365.50.

“Gold prices remained positive above $2,335 and ₹72,000, as US participants returned from the Juneteenth holiday with a buying sentiment. This was driven by weak retail sales data and lower inflation figures. Expectations for a rate cut in September are growing, but if any Fed members hint at a delay beyond September, profit booking in gold is likely. The current support levels are reinforced by economic data. S of prolonged higher rates could trigger selling pressure,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.

What’s weighing on gold prices?

Data indicated a decline in U.S. jobless claims in the latest week, suggesting a relatively steady market. Meanwhile, U.S. single-family homebuilding decreased by 5.2 per cent to a seasonally adjusted annual rate of 982,000 units in May.

Recent figures highlighted a slowdown in t and inflationary pressures. Subdued retail sales data on Tuesday also indicated sluggish economic activity in the second quarter.

According to the CME FedWatch Tool, traders are currently factoring in approximately a 64 per cent probability of a Fed rate cut in September. Decreased interest rates lower the opportunity cost of holding non-yielding gold.

The rally in gold prices from March to May, reaching a peak of $2,449.89 on May 20, was fueled by safe-haven demand amid geopolitical and economic uncertainties, along with ongoing central bank purchases.

Among other precious metals, spot silver increased by 2.1 per cent to $30.37 per ounce, platinum decreased slightly by 0.1 per cent to $979.45, and palladium rose by 1.7 per cent to $920.