Gold Prices Rise on Optimism for Fed Rate Cut and Lower US Treasury Yields

Gold prices surged 1 percent on Friday, driven by falling US Treasury yields and optimism for an interest rate cut by the Federal Reserve in September. Spot gold rose to $2,382.98 per ounce, rebounding from its recent low, while US gold futures for August delivery settled 1.2 percent higher at $2,381.

Market analyst Fawad Razaqzada noted, “Today’s mixed-to-weaker US data suggests inflationary pressures and economic activity are waning, paving the way for the Fed to cut rates twice this year.” This sentiment was further supported by fresh evidence of progress against inflation, fueling expectations for interest rate cuts starting in September.

Lower rates reduce the opportunity cost of holding non-yielding bullion, making gold more attractive to investors. Additionally, India’s recent decision to slash import duties on gold and silver boosted physical demand in the country, with gold premiums reaching a decade-high level.

In contrast, silver, platinum, and palladium experienced declines, with silver falling to $27.80 per ounce, platinum shedding 0.2 percent, and palladium losing 1.1 percent. These metals were on track for their third consecutive weekly fall.

Overall, the gold market remains dynamic, with various factors influencing prices and demand. Investors will be closely watching for further developments in the coming weeks.