(Sponsored Content) Consolidating Thursday's 1.8% surge, New York spot gold inched down $1 to finish last week at $2,414 as cooling inflation and softer US economic data cemented rate-cut expectations, stoking risk appetite at the expense of safe havens. The metal gained 1.1% for the week, its second straight weekly rise. Silver fell 1.6% for the day and week, closing at $30.89 an ounce, writes Bill Musgrave with Dana Samuelson, vice president and president, American Gold Exchange Inc.
The producer price index measuring wholesale inflation rose 0.2% in June, slightly more than 0.1% forecast, bringing the 12-month rate up to 2.6%. The core PPI, less volatile food and energy, was flat in June, pulling the 12-month rate down to 3.1% from 3.3% in May.
Following Thursday's CPI data showing consumer inflation falling for the first time in four years, the modest PPI reinforced the view that disinflation is back after a reversal during the first quarter of the year. After the CPI print, San Francisco Fed president Mary Daly said she is finally ready to support rate cuts, given two straight months of falling consumer inflation and the general cooling of the labor market.
All three major US equity indexes jumped 1%, with the Dow and S&P 500 hitting new all-time highs as investors grew increasingly convinced that the Fed will almost certainly begin cutting rates in September, if not before.
Weak consumer sentiment data contributed to the rate-cut narrative. The University of Michigan survey said sentiment fell to an eight-month low in July, the fourth decline in a row and the softest reading since November.
Fed fund futures traders now see a 94% likelihood of at least a quarter-point cut in September, with a second cut expected by December. Benchmark 10-year Treasury yields retreated slightly, buoying gold by decreasing the opportunity cost for holding it instead of bonds. The dollar dropped another 0.4% against major rivals, supporting gold by making it cheaper overseas.
Platinum slipped 0.1% Friday for a weekly loss of 3.4%. Palladium fell 2.5% for the session and 6.5% for the week.
At the New York spot close: gold dipped $1 to $2,414; silver slid 51 cents to $30.89; platinum edged down $1.30 to $1,005.70; and palladium retreated $24.70 to $972.30 an ounce.
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