Gold edges higher as weak US data lifts Fed rate-cut bets

Gold prices edged higher on Thursday as lacklustre U.S. economic activity fuelled expectations that the Federal Reserve would cut interest rates this year.

FUNDAMENTALS

* Spot gold was up 0.2% at $2,331.38 per ounce, as of 0126 GMT. U.S. gold futures edged 0.1% lower to $2,345.00.

* With recent data showing a moderation in the labour market and price pressures, the U.S. Fed is looking for further confirmation that inflation is cooling as they steer cautiously toward what most expect to be an interest rate cut or two by the end of this year.

* U.S. retail sales edged 0.1% higher last month, the Commerce Department’s Census Bureau said. Economists polled by Reuters had forecast retail sales gaining 0.3% in May. * Investors are now focussed on weekly jobless claims due at 1230 GMT and flash purchasing managers’ indexes on Friday, which could offer more clarity on consumption and economic strength. * Chicago Federal Reserve Bank President Austan Goolsbee on Tuesday called the most recent consumer price inflation reading “excellent,” and said he sees the potential for more inflation cooling this year. * Traders are currently pricing in about a 66% chance of a Fed rate cut in September, according to CME FedWatch Tool.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* Elsewhere, Britain’s central bank looks on course to hold interest rates at a 16-year high of 5.25% as underlying inflation pressures prove persistent.

* Spot silver rose 0.5% to $29.91 per ounce, platinum was down 0.2% at $978.42 and palladium lost 0.2% to $903.25.

DATA/EVENTS (GMT) 0115 China Loan Prime Rate 1Y, 5Y June 1100 UK BOE Bank Rate June 1230 US Housing Starts Number May 1230 US Initial Jobless Clm Weekly 1230 US Philly Fed Business Indx June 1400 EU Consumer Confid. Flash June.