Gold Trades High On Rate Cut Hope

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Gold Trades High On Rate Cut Hope

Gold Trades Near $2400 On Hopes Of Rate Cuts

Gold prices remain steady during Thursday's session after making gains on weak inflation data. The recent inflation data has now paved the way for rate cuts by the Federal Reserve, which is now rejoiced by Gold & several other currencies.

The US Dollar has also sunk to 1-month lows on soft inflation data as the rate cut prospects have increased. All of this bodes well for the yellow metal, which has now risen and is now en route to the May high.

Gold Up By 1% After Cpi

For now, the spot gold is trading near $2388.84 with a +0.1% gain for the day while the Gold futures (June) are seen near $2393.50.

If we look at the gains in Gold from Wednesday, it is more than 1%, and most of it is because of the weak inflation reading in April. Additionally, the core CPI has also fallen when compared with March's reading.

According to experts, weak retail sales along with CPI have now increased the hopes that the disinflation trend will continue in the next few months. As a result of this, the Fed will now have the confidence it needs to cut the rates.

For now, there's a 54% chance of a September rate cut worth 0.25% based on the CME FedWatch tool. Normally, an environment of high rates drives investors away from investing in gold. But now that the chances of rate cuts have jumped up, it makes sense for the Gold to turn higher.

Despite the hopeful data, a few Fed officials are still of the view they need more data confirmation to know that the disinflation trend is real. At the same time, it is also important to know that inflation stays above the 2% annual target set by the Federal Reserve.

Just like Gold, other metals such as Platinum and Silver have also registered gains post-CPI which suggest that the era of high interest rates is now at crossroads.

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