Gold set for first weekly gain in four on U.S. rate cut hopes

Gold prices rose on Friday and were on track for their first weekly gain in four after U.S. economic data indicated a softening of price pressures, fuelling optimism that a rate cut by the Federal Reserve could be forthcoming.

Spot gold was up 1.4% at $2,334.70 per ounce. Bullion has gained 1.9% so far for the week.

Safe-haven demand, driven by geopolitical and economic uncertainty, as well as persistent central bank buying contributed to a rally in gold from March to May, taking spot prices to a record high of $2,449.89 on May 20.

Now, gold, and the broader metals sector is undergoing consolidation with no significant downside levels broken or challenged, said Ole Hansen, head of commodity strategy at Saxo Bank.

“We conclude the underlying demand is strong enough to prevent the current consolidation turning into a major correction,” Hansen said.

Supporting prospects for non-yielding bullion, traders are seeing a 67% chance of a U.S. rate cut in September, according to the CME FedWatch Tool, after data this week showed that consumer prices were unchanged in May for the first time in nearly two years while producer prices unexpectedly fell.

However, signals on the technical front have deteriorated for gold this week, with the current 50-day moving average of $2,345 becoming a resistance level, Kinesis Money said in a note.

As for the physical market, gold demand in India remained tepid this week as buyers postponed purchases in the absence of any major festivals, while premiums in top consumer China slid.

Spot silver rose 1.1% to $29.33 per ounce after hitting the lowest in nearly one month in the previous session.

Platinum was up 0.8% at $953.70 and palladium gained 1.8% to $898.97.

Source from CNBC : https://www.cnbc.com/2024/06/14/gold-eyes-first-weekly-gain-in-four-on-cooling-us-inflation.html