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Gold Holds Steady Amid Hopes of Imminent Fed Rate Cuts

19 Jun 2024 8:21 am
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Mumbai, 19 Jun (Commoditiescontrol): Gold prices remained stable on Wednesday following weaker-than-expected U.S. retail sales data, which bolstered expectations of imminent Federal Reserve rate cuts. Spot gold was steady at $2,327.76 per ounce, while U.S. gold futures dipped 0.2% to $2,342.00.

The Commerce Department's Census Bureau reported a modest 0.1% rise in U.S. retail sales last month, falling short of the 0.3% increase predicted by economists polled by Reuters. This softer data has reinforced the belief that the Federal Reserve may soon lower interest rates.

New York Fed President John Williams indicated that interest rates would gradually decline over time but did not specify when the central bank might start easing monetary policy. Currently, traders are pricing in a 67% chance of a rate cut by the Fed in September, according to the CME FedWatch Tool.

Lower interest rates generally decrease the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors.

Federal Reserve officials, encouraged by recent economic data, are seeking further evidence that inflation is cooling and monitoring the robust labor market for any signs of strain. Many expect at least one or two rate cuts by the end of the year.

Investors are also eyeing upcoming economic indicators, including weekly jobless claims due on Thursday and flash purchasing managers' indexes on Friday, for more insights into consumer spending and economic strength.

Additionally, the World Gold Council (WGC) revealed in its annual survey that more central banks plan to increase their gold reserves within the next year. This trend is driven by macroeconomic and political uncertainties, despite the high prices of the precious metal.

In other precious metals, spot silver declined 0.4% to $29.40 per ounce, platinum fell 0.4% to $968.59, while palladium saw a slight increase of 0.1% to $887.67.

(By Commoditiescontrol Bureau: 09820130172)

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