Gold Moves in prices edged higher in European trade on Friday, marking the second consecutive day of gains. The metal is moving away from three-week lows and is set for the fourth monthly profit in a row. This upward trend is supported by lower US 10-year treasury yields ahead of the crucial US personal spending data
which is the Federal Reserve’s favored inflation gauge. This data will provide fresh insights into the likelihood of Fed rate cuts this year.
Market Performance
Gold Price Movement
Gold prices rose by 0.2% today to $2,347 an ounce, with a session low of $2,337. This follows a 0.25% increase on Thursday, moving away from three-week lows of $2,322.
Monthly Trades
Despite being down 2.7% so far in May, gold is on track for its fourth consecutive monthly profit. The precious metal reached a record high of $2,450 an ounce on May 20 as major investment funds increased their holdings. These gains were also supported by a weaker dollar and falling US treasury yields after disappointing US growth and inflation data
which boosted the odds of two Fed rate cuts this year.
Factors Influencing Gold’s Rise
US Treasury Yields
US 10-year treasury yields fell by 0.3% today, retreating from four-week highs of 4.638%. This decline supports non-yielding assets like gold.
US Interest Rates
The market odds for a 0.25% Federal Reserve rate cut in September stand at 51%
with a 64% probability of a similar cut in November. According to the Fedwatch tool, investors now anticipate a single Fed interest rate cut in 2024.
US Personal Spending Data
Investors are closely watching the upcoming US personal spending data
which the Federal Reserve relies on heavily to assess inflation trends and shape monetary policy. This data will provide crucial insights into the likely path of future interest rates and economic conditions.
SPDR Gold Trust Holdings
Gold holdings at the SPDR Gold Trust remained flat yesterday at 532.21 tonnes, the lowest since May 10.
Conclusion
Gold is showing positive momentum as it heads for another monthly gain
driven by lower US treasury yields and anticipation of important US personal spending data. As investors await more data
gold’s performance will continue influenced by changes in US interest rates and economic indicators.
FAQs
Why is gold rising ahead of US spending data? Gold is rising due to lower US 10-year treasury yields and anticipation of crucial US personal spending data
which could influence future Fed rate cuts.
How do US treasury yields affect gold prices? Lower US treasury yields make non-yielding assets like gold more attractive
driving up their prices.
What the current outlook for US interest rates? Market expectations indicate a 51% chance of a 0.25% Fed rate cut in September and a 64% chance in November
with a single rate cut anticipated in 2024.
Why is US personal spending data important for gold prices? US personal spending data is crucial for the Federal Reserve to assess inflation and economic conditions
which in turn influences interest rate decisions and market sentiment towards precious metals like gold.
What the current holdings of the SPDR Gold Trust? Gold Moves in holdings at the SPDR Gold Trust remained flat yesterday at 532.21 tonnes
the lowest since May 10.