Gold heads for best month in more than 1 year; U.S. data in focus

By Sherin Elizabeth Varghese

(Reuters) – Gold rose on Thursday, bound for its biggest monthly rise since November 2022 after a blistering rally fuelled by bets for U.S. interest rate cuts, strong safe-haven demand and central bank buying.

Spot gold was up 0.8% at $2,212.47 per ounce, as of 1059 GMT, on track for a monthly gain of over 8%, and a second straight quarterly rise. U.S. gold futures edged 0.9% higher to $2,232.60.

Gold hit a record high last week after the Federal Reserve anticipated three rate cuts in 2024, and has since held near the all-time peak as traders hunker down for more U.S. data that could influence the central bank’s monetary strategy.

“Gold seems to be on standby after a three-day rally with investors on the sidelines ahead of key US data,” said FXTM senior research analyst Lukman Otunuga.

On the radar are the weekly U.S. initial jobless claims report due later in the day, followed by the U.S. core personal consumption expenditure (PCE) price index report on Friday.

“More signs of cooling price pressures may reinforce expectations around the Fed cutting rates – ultimately boosting appetite for gold. However, a sticky report is likely to drag the precious metal lower,” Otunuga said.

Traders are currently pricing in a 64% chance of a June cut, the CME Group’s FedWatch Tool showed.

Lower interest rates reduce the opportunity cost of holding bullion.

On the flip side, Fed Governor Christopher Waller stressed that recent economic data would warrant a delay or a reduced amount of interest rate cuts. “The market therefore seems to be underestimating the risk that US rate cuts will come later and be less substantial,” Commerzbank said in a note.

Silver was flat at $24.67 per ounce, platinum rose 0.7% to $900.10 and palladium climbed 1.6% to $999.12. All three metals were bound for monthly gains.

(Reporting by Sherin Elizabeth Varghese in Bengaluru and additional reporting by Harshit Verma; Editing by Mrigank Dhaniwala)