Mubasher: Gold traded higher on Thursday as demand for the safe-haven bullion on hopes of an interest rate cuts by the Federal Reserve after weaker inflation figures, as the US-China trade tensions escalate, Reuters reported.
By 8:09 am GMT, spot gold rose by 0.33% to $1,338.04 per ounce, US gold futures went up by 0.32% to $1,341.10 per ounce.
“We can see strong support at $1,330 for gold, and the metal looks to trade upside with expectations of lower interest rates,” Wing Fung Precious Metals dealing head Peter Fung was quoted by Reuters.
The US Labor Department on Wednesday reported that consumer price inflation rate inched up last month, which, along with a slowdown in the American economy, strengthens the case for interest cuts by the Fed this year.
Financial markets are already pricing in at least two rate cuts by the end of this year, amid heightened trade tensions, a global economic downturn, and a sharp decline in employment levels last May.
The Fed’s next rate-setting meeting by is due to be held on 18 and 19 June.
The lower interest rates get, the lower the opportunity cost of holding non-yielding metal become, and the more the US dollar weakens.
At 4:10 am GMT, the US dollar index, a tracker of the greenback against a basket of six major rivals, declined by 0.10% to 96.91.
On the trade side, US President Donald Trump indicated a “feeling” that a trade deal could be hammered out between Washington and Beijing, but nevertheless, reiterated his threat to raise levies on Chinese products in the event of no pact.
“We are still worried about the trade war and people are still looking at gold as a safe haven,” Fung said.