Gold prices climbed slightly higher on Thursday, following a sharp rise in the previous session, as the dollar and bond yields weakened. This shift comes amid growing speculation that the U.S. Federal Reserve may cut interest rates as early as September.
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Spot gold rose 0.1% to $2,388.10 per ounce by 0255 GMT, after gaining more than 1% on Wednesday to reach its highest level since April 19. U.S. gold futures also increased by 0.1% to $2,393.20.
The U.S. dollar fell by 0.2% against a basket of other major currencies, making dollar-priced gold less expensive for holders of other currencies. Additionally, the benchmark 10-year U.S. Treasury yield dropped to its lowest point in over a month.
The recent U.S. consumer price index data, combined with a lackluster jobs report and softer-than-expected payrolls for April, have provided reassurance to Federal Reserve policymakers. They are keen to see continued progress on inflation before reducing borrowing costs. Bullion, known as an inflation hedge, benefits from lower rates since higher rates increase the opportunity cost of holding non-yielding gold.
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Chicago Federal Reserve Bank President Austan Goolsbee expressed optimism that inflation would continue to decline. This sentiment aligns with Fed Chair Jerome Powell’s recent comments, suggesting it is unlikely the central bank will need to raise interest rates again soon.
In other precious metals, spot silver fell by 0.5% to $29.56 per ounce, while palladium gained 0.3% to $1,012.93 per ounce. Platinum rose by 0.7% to $1,071.00, marking its highest level since May 22 of last year.
As the market continues to digest these developments, investors will closely monitor upcoming economic data and Federal Reserve signals, which could influence the trajectory of precious metal prices.
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