Due to the lower dollar and speculation that the U.S. Federal Reserve may soon pause its cycle of interest rate increases, gold prices increased on Thursday to their highest level in nine weeks.
By 0325 GMT, spot gold had risen 0.5% to $1,987.18 per ounce, the highest price since mid-May. To $1,988.80, U.S. gold futures were up 0.4%.
According to Baden Moore, head of carbon and commodities strategy at National Australia Bank, “we are bullish gold from here as we are likely to reach the end of Fed rate hikes at the next FOMC (Federal Open Market Committee) meeting (26 July),” he said that the market was also focusing on prospective rate cuts.
Bullion benefits from lower interest rates because they lower the opportunity cost of storing non-yielding bullion.
Additionally, the dollar index was down 0.2%, nearly reaching an over-year low, which made gold more affordable for owners of other currencies.
According to CME’s Fedwatch tool, the Fed is anticipated to raise rates by 25 basis points (bps) during its meeting the following week, keeping them in the 5.25%–5.5% range throughout 2023.
Investors will be watching the U.S. initial jobless claims statistics for the week of July 15 later in the day, which are expected to increase from a seasonally adjusted 237,000 to 242,000.
According to Moore, “U.S. jobless claims have been increasing over the 2Q; the market is anticipating a sideways move. If we see jobless claims flat to higher, I’d expect a positive move on gold.”
Data revealed that on Wednesday, holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, increased by 0.19% to 913.80 tonnes.
As a result of China maintaining its lending criteria while increasing the cross-border macro prudential adjustment ratio for corporations and financial institutions, the yuan increased throughout Asia.
As UK inflation started to decline, risk appetite increased and Asian markets rose as the pound fell.
Palladium decreased 0.2% to $1,305.54, platinum increased 0.1% to $973.81, and spot silver increased by 0.3% to $25.23 per ounce.