Gold climbs towards 2019 highs on expectation of Fed rate cut
New York (June 6) - Gold prices rose on Thursday, drawing closer to their highest levels this year on increased expectations of a U.S. rate cut, even as some investors locked in profits from bullion's recent rally.
Spot gold rose 0.5% to $1,336.67 per ounce as of 0947 GMT, while U.S. gold futures gained 0.6% to $1,341.
"Gold's strength is most certainly based on the prompt change in the market outlook on how aggressively the Fed will cut rates over the coming months," Saxo Bank commodity strategist Ole Hansen said.
Having suspended a three-year monetary tightening campaign earlier this year, the U.S. Federal reserve is widely expected now to cut rates, especially after comments from Chairman Jerome Powell that the central bank will closely monitor the economic impact of trade conflicts. Non-yielding gold has risen about $60 an ounce in one week. The metal approached its highest level this year of $1,346.73 in the previous session, climbing to $1,343.86 an ounce before reversing course.
"It seems like some profit-taking has emerged since then. Also, gold has run a long way in its rally in a short span of time, so I would not be surprised to see it consolidate," Hansen said.
Meanwhile, U.S. President Donald Trump threatened to hit China with tariffs on "at least" another $300 billion of Chinese goods but said he thought China and Mexico wanted to make deals in their trade disputes with the United States. "Investor indifference towards gold is seemingly thawing, with market participants that have been inactive for some (time) starting to get involved again. We think continuing trade tensions are likely to keep markets uneasy, and therefore keep gold supported," UBS analysts said in a note.
In other precious metals, silver rose 1% to $14.95 per ounce, close to a more than one-month high of $15.04 from the previous session.
The end of the Fed tightening cycle and possible rate cuts are silver-positive as well, HSBC analyst James Steel said in a note.
"Greater financial market volatility or an increase in trade or geopolitical risks may stoke safe-haven demand, especially if gold is also rallying."
Palladium rose 0.9% to $1,340 an ounce, while platinum climbed 1% to $806.68, having hit a near three-week high at $832.63 on Wednesday.
Reuters
