Gold prices rose sharply last night, supported by a weakening US dollar and weaker-than-expected US economic data, in the context of Russian President Vladimir Putin not attending peace negotiations, boosting safe-haven purchases.
US gold futures also increased by nearly 1%. The USD Index (DXY) fell 0.1%, making gold cheaper for investors holding other currencies.
Data shows that the US producer price index (PPI) suddenly decreased in April, while the growth rate of retail sales also slowed down. Earlier in the week, the report showed that consumer inflation in April increased lower than expected.
The market is now expecting the US Federal Reserve (FED) to start cutting interest rates in September. Low interest rates make gold more attractive because it is a non-interest-bearing asset.
Peter Grant - Vice President and senior metals strategist at Zaner Metals commented: The data released on Thursday is creating more room for the FED to cut interest rates, and the market is gradually leaning towards the possibility of policy easing.
Mr. Putin's failure to attend peace negotiations in Turkey reduces expectations for a deal, which also contributes to supporting today's gold price," Grant said.
President Putin has sent a delegation to Turkey to attend talks with Ukraine, rejecting Kiev's invitation to ask him to directly dialogue with President Volodymyr Zelenskiy.
Analysts said investors are still cautious as global trade tensions continue, even though the US and China have reached a 9-day agreement to postpone the tax.
Spot silver prices increased by 0.6% to 32.42 USD/ounce; platinum increased by 1.3% to 989.05 USD/ounce; palladium increased by 1.6% to 966.05 USD/ounce.
According to Johnson Matthey (a British multinational corporation), the palladium market - which was in a state of shortage from 2012 to 2024 will reach a state of balance this year due to reduced demand due to declining gasoline-powered vehicle production and increased recycling activities in China.
