The price of gold is moving upwards today Friday, in the wake of the release of data that showed that the American economy slowed down in the first quarter of 2024.
The data gives the precious metal some boost ahead of today’s US personal consumer spending report, an indicator the US Federal Reserve takes very seriously in setting its monetary policy on interest rates.
Spot gold was up 0.2% at $2,335.86 an ounce, while June futures were up 0.2% at $2,335.68 an ounce.
Gold found some support after the dollar fell following the release of weaker-than-expected gross domestic product data (1.6% from 3.4% in Q4 2023). But that support is limited in scope, as the stronger GDP price index saw traders further weigh in on expectations of a rate cut by the US Federal Reserve.
Spot prices are on course to lose 2% this week as they extended their decline from record highs hit earlier in April. Prices had reached record highs around $2,430 an ounce.
A key pressure point for the precious metal was a reduced premium on unrest in the Middle East as an Iran-Israel war did not proceed.
The bets of the money markets
But the biggest source of gold’s losses was a reduction in bets that the Fed will cut interest rates. CME’s Fedwatch tool showed financial markets expect the Fed to start cutting interest rates by September or the fourth quarter.
Something brought the upcoming PCE price index data into focus. This metric is the Fed’s preferred measure of inflation and is likely to be a factor in the central bank’s outlook.
Prolonged higher interest rates bode poorly for gold as they raise the opportunity cost of investing in the precious metal.
Rise in other precious metals as well
And the other precious metals are moving upwards today Friday. Platinum futures were up 0.6% at $931.25 an ounce, while silver futures were up 0.9% at $27.60 an ounce.
At the same time copper recovers to a 2-year high. Three-month copper futures on the London Metal Exchange were up 0.8% at $9,983.50 a tonne, while one-month copper futures were up 0.7% at $4.5745 a pound.
