Mumbai, 21 May (Commoditiescontrol): Gold prices inched higher on Tuesday, hovering near the record peak reached in the previous session, as recent economic data strengthened expectations that the U.S. Federal Reserve might start cutting interest rates later this year. Spot gold rose 0.1% to $2,428.14 per ounce, following Monday's record high of $2,449.89. However, U.S. gold futures fell 0.3% to $2,431.80 per ounce.
The upward trend in gold was driven by U.S. consumer price data for April, which indicated a smaller-than-expected increase, suggesting that inflation is resuming its downward trend. This data has fueled bets on a potential rate cut by the Fed in September. Despite the cooling inflation data, Fed officials remain cautious, emphasizing the need for continued vigilance before confirming that inflation is on track to meet the central bank’s 2% target.
Gold, traditionally seen as a hedge against inflation, faces increased opportunity costs when interest rates are higher, as it does not yield any interest. This dynamic keeps investors closely monitoring the Fed’s policy stance.
In other market news, Legal & General Investment Management (LGIM), a major shareholder of Anglo American, has expressed support for the company’s break-up plan announced last week, as BHP Group's deadline to submit a formal takeover offer approaches.
Meanwhile, shares of Chinese property developers wobbled as investors worried that China's recent measures to stabilize its troubled property sector might not be sufficient to foster a sustainable recovery in demand and confidence.
Risk appetite among investors remains strong, suggesting potential gains in Asian markets, absent any major economic data or events in the region.
Elsewhere, the International Criminal Court's prosecutor has requested arrest warrants for Israeli Prime Minister Benjamin Netanyahu, his defense chief, and three Hamas leaders over alleged war crimes.
In other precious metals, spot silver rose 1.3% to $32.25 per ounce, platinum dipped 0.1% to $1,045.80, and palladium declined 0.4% to $1,023.25.
(By Commoditiescontrol Bureau: 09820130172)
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