Investing.com - Gold prices were flat on Friday, but ended the month with their biggest monthly gain since June 2016 amid increasing geopolitical tensions and hopes the Federal Reserve will deliver an interest-rate cut as soon as July.
XAU/USD was up 0.33% at $1,410.29 by 3:05 PM ET (8:05 PM GMT), while gold futures for August delivery on the Comex division of the New York Mercantile Exchange settled 0.1% higher to $1,413.79 a troy ounce.
Data showing U.S. consumer spending, the backbone of the economy, remained solid and core PCE inflation had steadied did little to knock expectations for a Fed rate cut, keeping the gold bugs firmly in control.
According to Investing.com’s Fed Rate Monitor, 100% of traders expect the Fed to cut rates in July.
The August gold contract finished the month up 7.8%, the largest monthly gain since June 2016.
“Gold has benefitted from its safe-haven status amid (a) deteriorating macroeconomic outlook,” ANZ Research said in a note earlier this week.
The firm expects gold prices to settle above $1,400 an ounce, with a “reasonable chance” of breaking $1,500 an ounce over the next 12 months.
“We believe it will remain a highly relevant portfolio diversifier, as investors seek protection from growing uncertainties around global economic growth and rising geopolitical risks,” ANZ Research added.
The diversification benefit of gold was underscored by data from fund-tracker EPFR showing investors were throwing caution to the wind and betting big on the yellow metal.
Mutual funds that invest in commodities sucked in $1.5 billion in the week ended Wednesday, according to fund-tracker EPFR, with two-thirds of the total sum, $1 billion, in dedicated gold funds, which recorded their biggest inflows since mid-2017.