Investing.com - Gold prices pared earlier gains after economic data on Friday gave a solid reading on the economy, dampening hopes for a looser monetary policy from the Federal Reserve.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, gained $10.90, or 0.8%, to $1,354.60 a troy ounce by 9:47 AM ET (13:47 GMT), compared to intraday highs of $1,361.95 - their highest level in over a year.
U.S. retail sales increased in May and sales for the prior month were also revised higher, providing a more upbeat reading of consumer spending that could lighten concerns over an economic slowdown.
Industrial production also grew in May at twice the rate that analysts had forecast, in contrast to earlier data from China that had showed output growth at its slowest rate in 17 years in May.
Although the Fed is not expected to touch interest rates in its policy decision next week, markets have steadily been increasing bets for cuts throughout 2019 as concerns over the negative impact of U.S.-China trade tensions and signs of weak job creation and muted inflation in the American economy were seen to support a more dovish stance.
Fed funds futures currently price in the chance of a quarter-point (25 basis points) reduction at 88% in July, while the probability of a total of three such cuts by the end of the year has risen to 59%.
A Bloomberg survey of economists published on Friday shows a much more cautious stance. The consensus of those polled in the survey taken from June 7 to 12 sees just one rate cut this year.
Gold, which benefits from lower interest rates that lower the opportunity cost of holding non-yielding bullion, has steadily climbed since Fed Chairman Jerome Powell said that policymakers would “act as appropriate to sustain the expansion”, a sign investors interpreted as a dovish shift. It's getting support from the fact that an increasing amount of safe assets in the euro zone are now offering negative yields. The 10-year German benchmark bond yield hit a new all-time record low of -0.27% in earlier trading Friday.
Since the remarks on June 4, gold has only registered losses on one occasion and is up 2.2%.
In other metals trading, silver futures rose 0.6% at $14.977 a troy ounce by 9:49 AM ET (13:49 GMT).
Palladium futures traded up 0.7% at $1,448.30 an ounce, while sister metal platinum lost 0.2% at $807.75.
In base metals, copper fell 0.8% to $2.636 a pound.