Gold Prices Steady Amidst U.S. Inflation Report
Gold prices steadied on Friday and were headed for a third straight quarterly gain after a key U.S. inflation report was broadly in line with expectations, boosting hopes that the Federal Reserve could cut interest rates by September. Spot gold was steady at $2,326.47 per ounce, as of 1833 GMT, with prices having gained over 4% for the quarter. U.S. gold futures settled 0.1% higher at $2,339.6.
Supportive Market Conditions for Gold
“We are continuing on trend in a very incremental slow pullback of inflation. As a result, we’ve seen yields continue to creep lower, bonds creep higher, and that is somewhat supportive for the gold market,” said David Meger, director of alternative investments and trading at High Ridge Futures. Gold was also supported by a decline in the U.S. Treasury yields, making the non-yielding bullion more attractive for investors.
Market Expectations of Fed Rate Cuts
Market bets rose on hopes that the Federal Reserve would cut interest rates by September and again in December, following the Personal Consumption Expenditures Index showing inflation did not rise at all from April to May. Traders are currently pricing in about a 68% chance of a Fed rate cut in September, compared with 64% before the release of the inflation data, according to the CME FedWatch tool. San Francisco Federal Reserve Bank President Mary Daly indicated that the latest inflation data was “good news that policy is working.”
“The price of gold has been trading in a fairly tight range and will probably hold this range until the FOMC confirms they will be cutting rates,” said Chris Gaffney, president of world markets at EverBank.
Performance of Other Precious Metals
Elsewhere, spot silver rose 0.3% to $29.15, and platinum gained about 1% to $997.13, both set for quarterly gains. Spot palladium rose about 5% to $975.45 but was headed for a third straight quarterly drop.
Additionally, gold continues to be viewed as a safe haven asset amidst market uncertainties, including geopolitical tensions and the ongoing COVID-19 pandemic, which could further support its prices in the coming months.
