BENGALURU- Gold prices edged higher on Wednesday after softer US retail sales data boosted expectations that the Federal Reserve will cut interest rates this year.
Spot gold was up 0.1 percent at $2,331.17 per ounce. US gold futures fell 0.1 percent to $2,345.60.
Data released on Tuesday showed US retail sales barely rose in May, suggesting that economic activity remained lacklustre in the second quarter.
“Weaker Treasury yields overnight and subdued moves around the US dollar following a disappointing US retail sales read seem to offer room for some relief in the yellow metal,” said IG market strategist Yeap Jun Rong.
“While US policymakers have guided for only one rate cut through 2024, market rate expectations are leaning more dovish, which seems to be finding validation from pockets of economic weakness presented. Further economic weakness may offer a lift for gold prices.”
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
With recent data showing a moderation in the labor market and price pressures, the Federal Reserve is looking for further confirmation that inflation is cooling.
