June 20 (Reuters) – Gold prices edged higher on Thursday as lacklustre U.S. economic activity fuelled expectations that the Federal Reserve would cut interest rates this year.
**Spot gold and U.S. gold futures**:
Spot gold was up 0.2% at $2,331.38 per ounce, as of 0126 GMT. U.S. gold futures edged 0.1% lower to $2,345.00.
**Reason for potential interest rate cut**:
With recent data showing a moderation in the labour market and price pressures, the U.S. Fed is looking for further confirmation that inflation is cooling as they steer cautiously toward what most expect to be an interest rate cut or two by the end of this year.
**U.S. Retail Sales**:
U.S. retail sales edged 0.1% higher last month, falling short of economists’ expectations of 0.3% growth in May.
**Upcoming economic indicators**:
Investors are now looking ahead to weekly jobless claims and flash purchasing managers’ indexes for more insights into consumption and economic strength.
**Market expectations and Fed rate cut probability**:
Traders are currently pricing in about a 66% chance of a Fed rate cut in September, according to CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
**Insight on interest rates**:
Meanwhile, Britain’s central bank is likely to keep interest rates steady at a 16-year high of 5.25% due to underlying inflation pressures remaining persistent.
**Other precious metals**:
Spot silver rose 0.5% to $29.91 per ounce, platinum was down 0.2% at $978.42, and palladium lost 0.2% to $903.25.
**Upcoming Data/Events**:
– 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
Overall, the market sentiment remains optimistic about a potential interest rate cut by the Federal Reserve, driven by signs of cooling inflation and weakening economic activity. The upcoming economic indicators will play a crucial role in shaping future market expectations.
