Gold Holds Gain as Soft US Data Reinforces Fed Rate-Cut Bets
Gold held a small gain after US inflation data came in weaker-than-expected, spurring traders to shore up bets on interest rate cuts by the Federal Reserve.
Bullion traded near $3,255 an ounce, after advancing 0.4% in the previous session following a report that showed the consumer price index softened in April. The print suggested there’s been little urgency by companies to pass along the cost of higher tariffs to consumers, following several crippling trade measures from President Donald Trump.
After the data, swaps traders boosted wagers on at least two rate reductions this year, although the Fed’s monetary easing path looks far from certain as it continues to evaluate the potential impacts of Trump’s trade agenda. Lower borrowing costs tend to benefit gold, as the metal doesn’t yield interest.
Investors have also been monitoring US-China trade developments, after the two nations reached a temporary truce by lowering tariffs on several of each other’s products for 90 days. There were continued signs of progress on Tuesday, after Bloomberg News reported that Beijing had removed a month-long ban on airlines taking delivery of Boeing Co. planes.
Gold is up almost a quarter higher this year and reached an all-time high last month. The easing of US-China tensions has cut some haven appetite this week amid optimism that a less aggressive tariff agenda will help the world’s largest economy avoid a recession.
Still, several economists see further pain on the inflation front, with the brunt of the duties Trump put in place earlier this year likely to be revealed in upcoming data prints.
Read More: US-China Truce Likely to Avert Recession But Not Slowdown
Spot gold was up 0.1% at $3,254.75 an ounce as of 7:51 a.m. in Singapore. The Bloomberg Dollar Spot Index was steady, following its 0.7% slump on Tuesday. Silver, palladium and platinum were little changed.
Source: Bloomberg
