Gold rises ahead of US Fed announcement, soft inflation data; silver up by 3.2%

Spot gold is currently trading around $2,300 per ounce after reaching a record high of $2,449.89 on May 20, marking a gain of more than 11% so far this year.

Vaamanaa Sethi
First Published12 Jun 2024, 09:15 PM IST
Gold price surged over 1% on Wednesday ahead of US Fed announcement.
Gold price surged over 1% on Wednesday ahead of US Fed announcement.

Gold prices rose 1 per cent on Wednesday following a surprisingly soft U.S. consumer inflation report, which fueled hopes for an interest rate cut in 2024. Investors are also anticipating the release of the Federal Reserve's latest policy statement and economic projections.

As of 1311 GMT, spot gold increased by 1 per cent to $2,338.59 per ounce, while U.S. gold futures climbed 1.2 per cent to $2,335.50.

The headline consumer price index remained flat on a month-on-month basis in May, below the expected 0.1 per cent gain. Core prices rose by 0.2 per cent, also falling short of economists' projections of a 0.3 per cent increase.

Also read: Gold and silver prices today on 12-06-2024: Check latest rates in your city

Investors have flocked to the precious metal, driven by expectations of monetary easing, geopolitical tensions in Europe and the Middle East, and significant central bank purchases, particularly by China.

Spot gold is currently trading around $2,300 per ounce after reaching a record high of $2,449.89 on May 20, marking a gain of more than 11 per cent so far this year.

“Commodities are broadly stuck in a range and trading flat, as we look ahead to the U.S. CPI numbers and the Federal Reserve’s policy meeting outcome later in the day. Although the Fed is expected to keep rates unchanged today, but their forward guidance/ commentary on inflation will be closely watched and any surprises would lead to increased volatility in the financial market,” said Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services.

What's weighing on gold prices?

Traders increased their expectations for Fed policy easing, now pricing in 50 basis points (bps) of cuts, or two quarter-percentage-point reductions, by the end of the year, up from 40 bps before the CPI data. The likelihood of a rate cut at the Fed's September meeting rose to about 70 per cent, compared to around 54 per cent prior to the data.

Also read: Gold price dips ahead of US Fed meeting. Opportunity to buy in this correction?

Attention is now focused on the U.S. central bank's policy statement and updated quarterly economic projections, set to be released at 2 p.m. EDT (1800 GMT). Fed Chair Jerome Powell will hold a press conference at 2:30 p.m. EDT.

Although most analysts and traders remain optimistic about gold, they believe the chances of the precious metal surpassing $3,000 per ounce are slim at this time.

The dollar index fell by 0.7 per cent, and benchmark U.S. 10-year Treasury yields declined to their lowest levels since April 1.

Spot silver increased by 3.2 per cent to $30.19 per ounce, platinum rose by 2.2% to $972.60, and palladium gained 4.8 per cent to $926.25.

 

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First Published:12 Jun 2024, 09:15 PM IST
HomeMarketsCommoditiesGold rises ahead of US Fed announcement, soft inflation data; silver up by 3.2%

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