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Gold Prices Pare Gains after Solid Economic Data

© Reuters.
© Reuters. – Gold prices pared earlier gains after economic data on Friday gave a solid reading of the economy, dampening hopes for a looser monetary policy from the Federal Reserve.

for August delivery on the Comex division of the New York Mercantile Exchange, gained $10.90, or 0.8%, to $1,354.60 a troy ounce by 9:47 AM ET (13:47 GMT), compared to intraday highs of $1,361.95.

U.S. increased in May while sales for the prior month were revised higher, providing an upbeat reading of consumer spending that could lighten concerns over an economic slowdown.

also grew in May at twice the rate that analysts had forecast, providing a brighter outlook.

Although the Fed is not expected to touch in its policy decision next week, markets have steadily been increasing bets for cuts throughout 2019 as concerns over the negative impact of U.S.-China trade tensions and signs of weak job creation and muted inflation in the American economy were seen to support a more dovish stance.

Fed funds futures currently price in the chance of a quarter-point (25 basis points) reduction at 88% in July, while the probability of a total of three such cuts by the end of the year has risen to 59%.

A Bloomberg survey of economists published on Friday shows a much more cautious stance. The consensus of those polled in the survey taken from June 7 to 12 sees just one rate cut this year.

Gold, which benefits from lower interest rates that lower the opportunity cost of holding non-yielding bullion, has steadily climbed since Fed Chairman Jerome Powell said that policymakers would “act as appropriate to sustain the expansion”, a sign investors interpreted as a dovish shift.

Since the remarks on June 4, gold has only registered losses on one occasion and is up 2.2%.

In other metals trading, rose 0.6% at $14.977 a troy ounce by 9:49 AM ET (13:49 GMT).

traded up 0.7% at $1,448.30 an ounce, while sister metal lost 0.2% at $807.75.

In base metals, fell 0.8% to $2.636 a pound.

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