GOLD prices eased on Friday (Jul 12) but headed for a third straight weekly rise, after cooler-than-expected US inflation data sparked hopes that the Federal Reserve will likely start cutting interest rates in September.
Spot gold fell 0.2 per cent at US$2,408.70 per ounce, as at 0148 GMT after rising 2 per cent on Thursday.
US gold futures eased 0.3 per cent at US$2,413.90.
Data on Thursday showed that US consumer prices unexpectedly fell and the annual increase was the smallest in a year, drawing the Fed another step closer to cutting interest rates.
“Inflation outlook and interest rate picture have moved in favour of gold this week. As we move closer to a lower interest rate environment, conditions could be ripe for gold to set new record highs before the year is out,” said Tim Waterer, KCM Trade’s chief market analyst.
According to CME FedWatch Tool, bets of a September US cut were now at 93 per cent, compared to a 70 per cent chance before the data was released.
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Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
San Francisco Fed Bank president Mary Daly on Thursday said that she expects further easing in both price pressures and the labour market to warrant interest rate cuts, while Chicago Fed Bank president Austan Goolsbee said the US economy looks like it is back on track to 2 per cent inflation.
Investors now await the US producer price index (PPI) reading due at 1230 GMT.
“The PPI figures could be key in determining which side of the US$2,400 level gold ends the week at,” Waterer said.
Spot silver slipped 0.8 per cent to US$31.20 per ounce, after scaling a more than one-month high on Thursday.
Platinum fell 0.2 per cent at US$1,001.90 and palladium dropped 1 per cent to US$984.63. Both the metals were set to register weekly declines. REUTERS
