By Barani Krishnan
Gold’s rally seems to have legs, with $1,350 appearing the next target for believers in the yellow metals amid the cacophony pressuring the Federal Reserve into a rate cut.
Bullion and futures of gold rose again on Thursday, a day after data showing tame U.S. consumer prices in May that strengthened the case for a Fed monetary easing.
Spot gold, reflective of trades in bullion, traded at $1,345.75 per ounce by 2:10 PM ET (18:10 GMT), up $8.95, or 0.7%, on the day.
Gold futures for August delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $6.90, or 0.5%, at $1,343.70 per ounce. It hit a near one week high of $1,345.95 earlier.
Some gold pundits think gold could go on to break $1,400 if the Fed issues a dovish policy statement after its June 19 meeting. Spot gold scaled an April 2018 high of $1,348.34 last Friday.
Lower interest rates make safe-haven assets such as gold, which does not yield interest, more attractive while weighing on the dollar.
If gold does not lose its momentum, it has a chance of finishing up for a fourth straight week. While the week-to-date gain itself is modest at 0.3%, the yellow metal has advanced 3% so far for June, putting it on to track to its best month since December’s 4.6% gain.
Gold’s rally comes as U.S. inflation growth continues to underperform Fed expectations. The central bank has also come under increased pressured to cut rates after less-than-stellar U.S. jobs data for May. Also President Trump has been criticizing the Fed for raising rates during his term. The president says the Fed’s reduction of its $3.8 trillion asset portfolio has harmed the economy and put the U.S. at a competitive disadvantage.