Gold rises to one-week high on subdued dollar, Fed rate cut hopes

London (June 13)  Gold prices rose to a week high on June 13, supported by expectations of an interest rate cut by the US Federal Reserve following soft inflation data, which also weighed on the dollar.

Spot gold was up 0.3% at $1,336.82 per ounce at 0950 GMT. Prices touched $1,338.87 earlier in the session, a high since June 7.

US gold futures were 0.2% higher at $1,340 an ounce.

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Data from the Labor Department showed on June 12 US consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy increased pressure on the US central bank to cut interest rates this year.

Fed policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May which have led financial markets to price in at least two rate cuts by the end of 2019.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

The dollar index versus a basket of six major currencies was down 0.1% on Thursday.

On the trade front, US President Donald Trump declined to set a deadline on Wednesday for levying tariffs on another $325 billion of Chinese goods and called the relationship with Beijing good but "testy" after China walked back commitments for a trade deal.

MoneyControl