Gold prices rose on Thursday to a two-week high amid rising prospects of an interest rate cut by the Federal Reserve after U.S. economic data showed mixed signals this week. Further supporting the rise in gold prices is the decline in the dollar index and U.S. Treasury bond yields, making gold more affordable to holders of other currencies.
In the UAE, gold prices gained more than AED4 with 24-carat gold rising to AED286.75 per gram, while 22-carat gold increased to AED265.50. Twenty-one-carat gold inched up to AED257.00, while 18-carat gold reached AED220.25.
Globally, spot gold saw a 0.57 percent increase to $2,368.76 per ounce, as of 5:20 GMT. Gold prices have gained 2 percent in the last 30 days, Meanwhile, U.S. gold futures saw a 0.52 percent increase to $2,387.95.
The dollar index saw a 0.11 percent decline while benchmark U.S. 10-year Treasury yields declined to almost their weakest levels in more than two months.
Potential rate cuts propel prices
Gold prices saw an increase for the second day this week, climbing to a two-week high of $2,373 in early trading as short-term factors indicate a potential interest rate cut by the Federal Reserve. Notably, the Bank of Canada (BoC) lowered its benchmark rate for the first time in four years on Wednesday from over a 20-year high amid signals of slower economic growth. In addition, the European Central Bank (ECB) is also expected to cut interest rates for the first time since March 2016 at the end of its June policy meeting later today.
The ADP employment report revealed that private-sector employment in the U.S. rose by 152,000 in May compared to 188,000 in April, less than analysts anticipated. Meanwhile, the U.S. Institute for Supply Management’s Services PMI rose to 53.8 in May, registering its highest level since August. This, along with easing inflationary pressures, impacted U.S. Treasury bond yields which offered some support to gold prices.
Traders now look forward to the release of the weekly U.S. initial jobless claims data and the non-farm payrolls data due on Friday for more insights into the health of the U.S. economy amid Fed interest rate cut speculations. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, further supporting its prices.
Read: Oil prices climb amid optimism for rate cuts, despite inventory build and demand concerns
Other precious metals
In addition to the rise in gold prices, the precious metals market signaled positive movement with spot silver surging by 1.43 percent to $30.44. Meanwhile, spot platinum rose 0.79 percent to $999.80 and spot palladium gained 1.03 percent to $941.00.
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