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Gold edges higher as rate hike expectations cool

CommoditiesJul 17, 2017 01:44PM ET
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© Reuters. Gold prices snapped a 5-week losing streak last week – Gold prices edged higher on Monday as investors questioned whether the Federal Reserve would keep to its plan of raising interest rates at least once more this year, after recent economic data failed to show an improvement in the pace of inflation.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $6.17, or 0.50%, to $1,233.68 a troy ounce.

Fresh on heels of weaker-than-expected inflation and retail sales data released last week, U.S. manufacturing data undershot economists’ forecasts, raising doubts about the strength of the U.S. economy, and the Federal Reserve’s resolve to raise rates at least once more the year.

The New York Fed’s Empire State manufacturing index fell to a seasonally adjusted reading of 9.8 from 19.8 in June.

Economists expected a reading of 15.

After dipping below $1,200 last week, gold prices have recovered, as dwindling U.S. rate hike expectations has weighed on both the dollar and the 10-year, boosting investor appetite for the precious metal.

The U.S. dollar hovered above a 10-month low against its rivals while the U.S. 10-Year remained sluggish falling 0.13% to 2.316,

Gold is sensitive to moves lower in both bond yields and the U.S. dollar – A weaker dollar makes gold cheaper for holders of foreign currency while a drop in U.S. rates, reduce the opportunity cost of holding non-yielding assets such as bullion.

Meanwhile, China, the world’s largest commodity user, released second-quarter gross domestic product (gdp) that topped expectations, spurring demand for commodities.

Silver futures rose 1.09% to $16.107 a troy ounce while platinum futures added 0.63% to $929.35.

Copper traded at $2.728, up 1.37%, while natural gas, tacked on 0.94% to trade at $3.008.

Gold edges higher as rate hike expectations cool

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