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Gold Hits Two-week High on Fed Rate Cut Bets

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)
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Gold Hits Two-week High on Fed Rate Cut Bets

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)

Gold prices touched a two-week high on Thursday, as softer US economic data increased the likelihood of interest rate cuts from the Federal Reserve this year.
Spot gold was up 0.5% at $2,337.87 per ounce as of 0802 GMT, after hitting its highest since June 7 earlier in the session. US gold futures rose 0.2% to $2,351.30, Reuters said.
"I am still favoring moves to the upside for the gold market in light of where we currently stand on the interest rate curve, which is at the peak," said Tim Waterer, chief market analyst at KCM Trade.
"The gold market seems content to consolidate recent gains rather than reach higher at this stage, at least until we see some further evidence of softening US macro data, which could alter the interest rate outlook."
Last week's data showed a moderation in the labor market and price pressures, followed up with soft retail sales data on Tuesday, suggesting that economic activity remained lackluster in the second quarter.
The Fed is looking for further confirmation that inflation is cooling as they steer cautiously toward what most expect to be a rate cut or two by the end of this year.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
"Mixed comments from Fed officials could inject volatility in the short term. We hold a positive view for gold with a price target of $2,500 per ounce by the end of 2024," ANZ analysts said in a note.
The market's immediate focus is on the US weekly jobless claims data due at 1230 GMT as well as flash purchasing managers' indexes on Friday.
Spot silver rose 1.7% to $30.25 per ounce, platinum was up 0.7% at $986.65 and palladium gained 1.3% to $916.75.

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Russia's Central Bank Holds Off on Interest Rate Hike

People skate at an ice rink installed at the Red Square decorated for the New Year and Christmas festivities, with the St. Basil's Cathedral, left, and the Kremlin, right, in the background in Moscow, Russia, Friday, Dec. 20, 2024. (AP Photo/Alexander Zemlianichenko)
People skate at an ice rink installed at the Red Square decorated for the New Year and Christmas festivities, with the St. Basil's Cathedral, left, and the Kremlin, right, in the background in Moscow, Russia, Friday, Dec. 20, 2024. (AP Photo/Alexander Zemlianichenko)
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Russia's Central Bank Holds Off on Interest Rate Hike

People skate at an ice rink installed at the Red Square decorated for the New Year and Christmas festivities, with the St. Basil's Cathedral, left, and the Kremlin, right, in the background in Moscow, Russia, Friday, Dec. 20, 2024. (AP Photo/Alexander Zemlianichenko)
People skate at an ice rink installed at the Red Square decorated for the New Year and Christmas festivities, with the St. Basil's Cathedral, left, and the Kremlin, right, in the background in Moscow, Russia, Friday, Dec. 20, 2024. (AP Photo/Alexander Zemlianichenko)

Russia's central bank has left its benchmark interest rate at 21%, holding off on further increases as it struggles to snuff out inflation fueled by the government's spending on the war against Ukraine.
The decision comes amid criticism from influential business figures, including tycoons close to the Kremlin, that high rates are putting the brakes on business activity and the economy.
According to The Associated Press, the central bank said in a statement that credit conditions had tightened “more than envisaged” by the October rate hike that brought the benchmark to its current record level.
The bank said it would assess the need for any future increases at its next meeting and that inflation was expected to fall to an annual 4% next year from its current 9.5%
Factories are running three shifts making everything from vehicles to clothing for the military, while a labor shortage is driving up wages and fat enlistment bonuses are putting more rubles in people's bank accounts to spend. All that is driving up prices.
On top of that, the weakening Russian ruble raises the prices of imported goods like cars and consumer electronics from China, which has become Russia's biggest trade partner since Western sanctions disrupted economic relations with Europe and the US.
High rates can dampen inflation but also make it more expensive for businesses to get the credit they need to operate and invest.
Critics of the central bank rates and its Governor Elvira Nabiullina have included Sergei Chemezov, the head of state-controlled defense and technology conglomerate Rostec, and steel magnate Alexei Mordashov.
Russian President Vladimir Putin opened his annual news conference on Thursday by saying the economy is on track to grow by nearly 4% this year and that while inflation is “an alarming sign," wages have risen at the same rate and that "on the whole, this situation is stable and secure.”
He acknowledged there had been criticism of the central bank, saying that “some experts believe that the Central Bank could have been more effective and could have started using certain instruments earlier.”
Nabiullina said in November that while the economy is growing, “the rise in prices for the vast majority of goods and services shows that demand is outrunning the expansion of economic capacity and the economy’s potential.”
Russia's military spending is enabled by oil exports, which have shifted from Europe to new customers in India and China who aren't observing sanctions such as a $60 per barrel price cap on Russian oil sales.