July 1 (Reuters) – Gold prices held steady in early Asian hours on Monday, buoyed by data that showed inflation in the U.S. subsided, boosting hopes that the Federal Reserve will start cutting interest rates this year.
Fundamentals
* Spot gold was little changed at $2,323.74 per ounce, as of 0022 GMT. Prices jumped more than 4% in the second quarter.
* U.S. gold futures were down 0.3% at $2,333.
* Data on Friday showed that U.S. prices were unchanged in May while consumer spending rose moderately, a trend that could draw the Fed closer to start cutting rates this year. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
* Traders are now pricing in a 63% chance of a first-rate cut in September, according to the CME FedWatch tool.
Insight on Physical Gold Demand
Last week, India’s physical gold demand remained lacklustre due to higher prices, while some buyers postponed purchases, hoping the government would cut import duty in the upcoming budget, also weighed on sentiment.
China’s Manufacturing Activity
Top consumer China’s manufacturing activity fell for a second month in June while services activity slowed, an official survey showed on Sunday, keeping alive calls for further stimulus.
Other Precious Metals
Spot silver fell 0.3% to $29.05 per ounce, platinum was flat at $993.60, and palladium inched up 0.2% to $974.50.
Upcoming Data/Events
Some key economic data/events to look out for include:
– China Caixin Mfg PMI Final
– UK Nationwide house price MM, YY
– France HCOB Manufacturing PMI
– Germany HCOB Manufacturing PMI
– EU HCOB Mfg Final PMI
– UK S&P Global Mfg PMI
– Germany CPI, HICP Prelim YY
– US S&P Global Mfg PMI Final
– US ISM Manufacturing PMI
Additional Insight
It is important for investors to closely monitor global economic indicators and geopolitical events, as they can significantly impact the prices of precious metals. Furthermore, the relationship between interest rates and the price of gold is crucial, as lower interest rates typically make gold more attractive due to the reduced opportunity cost of holding the precious metal. This dynamic interaction can influence gold prices in both the short and long term.
