Gold holds steady as US rate cut expectations rise

16 Jul 2024 , 11:21 AM

With hopes that the Federal Reserve may lower interest rates this year, gold prices remained stable on Tuesday. However, investors’ attention was diverted to U.S. economic data that is expected later in the day, hoping for more hints about monetary policy.

Spot gold remained stable at $2,422.12 an ounce. Prices rose to a new high of $2,449.89 per ounce on Monday, the highest level since May 20.

The price of gold futures fell 0.1% to $2,425.60.

Fed Chair Jerome Powell hinted that interest rate cuts may not be far off when he said on Monday that the three U.S. inflation readings for the second quarter of this year “add somewhat to confidence” that the pace of price increases is returning to the Fed’s target in a sustainable fashion.

U.S. retail sales data, which is coming at 1230 GMT, will be watched by investors. This week’s speakers will include Fed governors Christopher Waller and Adriana Kugler in addition to other Fed representatives.

Traders are still placing bets on two more rate cuts before the year ends and one in September. The opportunity cost of owning non-yielding bullion is decreased by lower rates.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings increased by 0.17% to 836.53 tons on Monday from 835.09 tons on Friday.

According to government and industry insiders who spoke to Reuters, bullion dealers took advantage of a loophole to register alloys comprising over 90% gold as platinum in order to dodge higher tariffs. As a result, India’s four-week imports of platinum from mid-June exceeded 2023’s total.

Spot silver dropped 1.4% to $30.59 an ounce, while palladium held steady at $950.31 and platinum declined 0.2% to $993.28.

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