Mumbai, 15 Jun (Commoditiescontrol): Gold prices surged over 1% on Friday, marking their first weekly gain in four weeks, as slowing inflation in the U.S. fueled optimism for a potential rate cut later this year. The rally in gold was further supported by a significant stock selloff across Europe.
Spot gold climbed approximately 1.3% to $2,332.55 per ounce, achieving a weekly increase of 1.8%. However, U.S. gold futures settled 1.3% lower at $2,349.10 per ounce. This divergence highlights the complex dynamics at play in the broader financial markets.
European stock indexes faced substantial declines, particularly French assets, which suffered due to the country’s ongoing political turmoil. Meanwhile, in the U.S., investor sentiment was cautious following strong gains in the S&P 500 and Nasdaq indexes.
Traders have adjusted their expectations to anticipate around 52 basis points (bps) of rate cuts by the end of December, up from 37 bps the previous Friday. This shift was driven by softer inflation data, which contrasted with earlier concerns sparked by a stronger-than-expected jobs report. According to LSEG’s interest rate probability tool, the probability of rate cuts has increased significantly.
The appeal of non-yielding bullion like gold tends to rise with lower interest rates, making it a more attractive investment compared to interest-bearing assets such as Treasury bonds. Recent data showed that consumer prices in the U.S. remained unchanged in May for the first time in nearly two years, while producer prices fell unexpectedly.
Despite the anticipation of rate cuts, the U.S. Federal Reserve's median "dot plot" from its recent policy meeting, where rates were held steady, projected just one quarter-point cut. This cautious stance by the Fed suggests a measured approach to monetary easing.
In the broader precious metals market, spot silver rose 1.6% to $29.46 per ounce after touching a one-month low in the previous session. Platinum edged up 0.8% to $953.99, and palladium increased by 1.3% to $894.50 per ounce.
As the market digests these mixed economic signals, gold remains a beacon of stability and potential growth, bolstered by hopes for future rate cuts and global financial uncertainty.
(By Commoditiescontrol Bureau: 09820130172)
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