Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold surged 1.5% to close near $2,395 as cooling inflation and soft US economic data boosted rate-cut expectations, pressuring yields and the dollar. It was the metal's highest finish in a month. Silver jumped 3.6% to $29.51 an ounce.

The consumer price index rose 0.3% in April, less than forecast, bringing the 12-month inflation rate down to 3.4% from 3.5% in March. The so-called core CPI also eased to 0.3%, lowering the 12-month rate to 3.6%, the lowest since April 2021.

Separately, US retail sales were flat in April after rising 0.6% in March, suggesting that consumer are becoming more careful with expenditures, a sign of a slowing economy. Consumer spending accounts for 70% of GDP.

Adding to the soft data, New York's Empire State index of business conditions fell further into the negative in May, tracking with deterioration in the national ISM manufacturing index in April.

Benchmark 10-year Treasury yields receded to a five-week low under 3.35% as investors speculated that softening inflation and a slower economy will prompt the Fed to cut interest rates in September. Falling yields boost gold by decreasing the opportunity cost for holding it instead of bonds.

Fed fund futures traders now see a 75% chance of a quarter-point cut in September, up from 66% yesterday, according to CME FedWatch.

The dollar plunged 0.7% to a one-month low against major rivals on the shifting rate view, lifting gold and other commodities by making them cheaper in other currencies.

Platinum and palladium rose 2.4% and 3.3%, respectively.

At the New York spot close: gold surged $35 to $2,394.90; silver jumped $1,03 to $29.51; platinum picked up $25.50 to $1,070.10; and palladium advanced $32.60 to $1,015 an ounce.