Gold prices gain

16 May 2024 , 09:04 AM

A weaker dollar and lower Treasury yields helped to push up gold prices on Thursday as reports suggested that U.S. inflation was slowing, which increased expectations that the Federal Reserve would decrease interest rates.

Spot gold was up 0.3% at $2,393.21 an ounce. On Wednesday, the price of gold increased by 1%. Gold futures increased by 0.1% to $2,397.60.

Other currency holders found gold more appealing as the dollar dropped 0.2% compared to a basket of other major currencies. The yield on the benchmark 10-year Treasury fell to its lowest level in over a month.

The U.S. Consumer Price Index increased 0.3% last month following increases of 0.4% in March and February. This indicates that inflation reversed course at the beginning of the second quarter, supporting expectations in the financial markets for a September interest rate reduction.

A government report on Wednesday indicated that inflation dropped somewhat in April, providing some hopeful news for Federal Reserve policymakers who are waiting to see further progress on inflation before lowering borrowing costs.

The opportunity cost of storing non-yielding gold is decreased by lower interest rates.

Austan Goolsbee, president of the Chicago Federal Reserve Bank, expressed optimism that inflation will continue to decline.

Regardless of who wins the White House in November, the U.S.-China trade war will inevitably intensify; nevertheless, the inflationary pressures this would bring about won’t automatically cause the Federal Reserve to adopt a more hawkish position on policy.

According to government data released on Wednesday, India’s merchandise trade imbalance in April was larger than anticipated due to a decline in exports and an increase in imports of gold.

Spot silver remained steady at $29.71 per ounce, while palladium increased by 0.3% to $1012.84 and platinum increased by 0.5% to $1,069.45.

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