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Gold rises on Fed rate cut hopes


Spot gold advanced 0.2% at $2,391.78 per ounce, after reaching its highest in more than three weeks on Wednesday

Gold prices rose on Thursday following a sharp rise in the previous session as the dollar and bond yields softened after the U.S. consumer inflation figure boosted the probability of rate cuts by the Federal Reserve as early as September.

Spot gold advanced 0.2% at $2,391.78 per ounce, as of 0553 GMT, after reaching its highest in more than three weeks on Wednesday. U.S. gold futures gained 0.1% to $2,396.10.

The dollar eased against other major currencies, making the greenback-priced bullion less expensive for holders of other currencies. The benchmark 10-year Treasury yield also hit its lowest in more than one month.

With inflation coming off the boil, gold is effectively making hay while the sun is shining and looks set to capture the $2,400 level, according to Tim Waterer, chief market analyst at KCM Trade.

He added: However, a potential jump in the dollar or treasury yields could be the biggest barrier for gold price in the remainder of the week.

Cooling U.S. consumer prices along with last week’s lacklustre jobs report and a softer-than-expected U.S. payrolls report for April comes as good news to Fed policymakers waiting to see renewed progress on inflation before lowering borrowing costs.

Bullion is known as an inflation hedge, but higher rates raise the opportunity cost of holding non-yielding gold.

Spot silver dropped 0.4% to $29.56 per ounce, having reached its highest since February 2021 earlier during the session.

Silver is catching up with gold. Strong fundamentals amid rising gold prices are likely to spur investor interest in silver, ANZ analysts wrote in a note, adding that they expect the metal to trade above $31 by the end of this year.

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