By Barani Krishnan
Investing.com - After the back-and-forth on how good the trade war could be for gold, the yellow metal is benefiting again from speculation over a possible Fed easing. It could reattempt topping $1,300 as U.S. inflation proves weaker than thought.
Bullion and futures of gold rose on Thursday as 10-Year Treasuryyields fell again, hovering near 20-month lows, as investors sought safety in government bonds. Money markets have priced in roughly two U.S. rate cuts by the start of next year as the yield curve between three-month bills and 10-year notes remained inverted.
Spot gold, reflective of trades in bullion, traded at $1,288.44 per ounce by 2:30 PM ET (18:00 GMT), up $8.46, or 0.7%.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $6.10, or 0.5%, at $1,287.10 per ounce. Comex's more active August gold, the forthcoming front-month contract, also closed up $6.10, or 0.5%, at $1,292.40. That could give gold futures a fresh shot at the $1,300 level in the coming week.
For a second day in a row, both gold and the dollar rose together, with the yellow metal coming into its own after lagging the greenback lately as a hedge to the trade war. The dollar index, which measures the U.S. currency against a basket of six currencies, hit a one-week high at 98.197.
"Gold is holding well, even with the dollar index at over 98, and ignoring that headwind is positive as global economic and political worries persist," George Gero, precious metals analyst at RBC Wealth Management in New York, said in email to Investing.com.
"Data shows the Fed that a reduction of rates may help as manufacturing, retail sales, housing and all is not as rosy as employment numbers show."
The U.S. personal consumption expenditures price index, released Thursday, showed a 1.0% growth rate last quarter, excluding volatile food and energy components.
It was the smallest increase in four years in the so-called PCE, the Fed's preferred inflation measure, and pushed inflation further below the central bank's 2% target. The PCE previously rose at a 1.3% pace.
Inflation has lately been running below levels targeted by the Fed, placing its Chairman Jerome Powell again under the scrutiny of President Trump, who's been pressuring for lower interest rates. Powell said recently he believed the soft inflation environment "may wind up being transient."
Elsewhere in metals, palladium rose for a fourth straight session, helping the silvery-white auto-component metal retain its standing as the world's costliest traded metal despite monthly losses since the first quarter.
Spot palladium jumped $15.60, or 1.2%, to $1,368 an ounce. It traded above $1,600 earlier this year before losing 10% in March and settling flat in April. While it is up 6% for the year, it on track to finish May 1% down.
Trades in other Comex metals as of 2:30 PM ET (18:40 GMT):
Palladium futures up $21.90, or 1.6%, at $1,365.80 per ounce.
Platinum futures up $3.60, or 0.5%, at $795.30 per ounce.
Silver futures up 9 cents, or 0.7%, at $14.51 per ounce.
Copper futures down 2 cents, or 0.6%, at $2.65 per pound.