Gold prices inched up on Thursday on optimism surrounding larger U.S. interest rate cuts as traders awaited additional economic data for clues on the Federal Reserve‘s policy trajectory.
In the UAE, gold prices declined by AED0.5 with 24-carat gold inching down to AED290 while 22-carat gold declined to AED268.50. Meanwhile, 21-carat gold reached AED260 and 18-carat gold reached AED222.75.
Globally, spot gold rose 0.40 percent to $2,394.42, as of 5:09 GMT. Meanwhile, U.S. gold futures gained 0.03 percent to $2,433.25.
Middle East tensions
Gold prices rose as tensions in the Middle East coupled with the downward trajectory of U.S. treasury yields continued to support bullion’s longer-term fundamentals. Amid fears of a broader regional conflict, the benchmark 10-year Treasury yield declined, making non-yielding assets like gold more attractive.
In addition, the U.S. dollar declined by 0.15 percent to 103.05, making greenback-priced bullion more affordable for other currency holders.
Rate cut optimism
Brokerage firms including J.P. Morgan, Citigroup and Wells Fargo have forecast a 50 basis-point interest rate cut in September after last week’s weak July U.S. jobs report. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Market focus now shifts to initial U.S. jobless claims data due today at 12:30 GMT, and Richmond Fed President Tom Barkin’s comments later in the day. Analysts said that gold prices will remain around the $2,350 mark in the short term before rising to around $2,500 later this year.
China’s central bank held back on buying gold for its reserves for a third consecutive month in July, according to data.
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Other precious metals
Prices of precious metals rose in line with the rise in gold prices on Thursday. Spot silver rose 0.99 percent to $26.86 while platinum gained 0.36 percent to $922.85. In addition, palladium rose 1.49 percent to $895.50 while copper declined 0.24 percent to $3.93.
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