Gold prices edged higher on Wednesday as softer U.S. retail sales data fueled expectations of a Federal Reserve interest rate cut this year. Spot gold was up 0.1% at $2,328.67 per ounce, while U.S. gold futures fell 0.2% to $2,330.30.
The lackluster U.S. retail sales data released on Tuesday indicated sluggish economic activity in the second quarter, leading market analysts to predict further economic weakness that could lift gold prices.
“Weaker Treasury yields overnight and subdued moves around the U.S. dollar following a disappointing U.S. retail sales read seem to offer room for some relief in the yellow metal,” said IG market strategist Yeap Jun Rong.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion, making gold more attractive to investors. The Federal Reserve is closely monitoring labor market and price data to confirm that inflation is cooling.
Investors are now awaiting the upcoming weekly jobless claims data on Thursday and flash purchasing managers’ indexes on Friday to gauge the economic outlook further.
Gold prices have been consolidating after reaching a record high of $2,449.89 on May 20. However, recent data showing a pause in China’s central bank’s gold purchases in May, after 18 months of buying, could pose a risk to the upside momentum in the gold price.
In the precious metals market, spot silver was down 0.5% at $29.37 per ounce, platinum rose 0.1% to $973.05, and palladium lost 0.1% to $885.88. The overall outlook for gold prices remains uncertain, with market dynamics shifting based on economic indicators and central bank actions.
