Gold rises 1% on expectations of US interest rate cut

Gold prices rose 1% on Thursday, supported by expectations that the US Federal Reserve will cut interest rates next month and investors are awaiting US inflation data for indications on the potential pace of the cut.

Gold rose 0.9% in spot transactions to $2,524.45 per ounce. US gold futures settled at $2,560.3.

US Labor Department data showed earlier on Thursday that the number of Americans who filed new applications for unemployment benefits fell last week amid scarcity of reemployment opportunities, indicating that the unemployment rate continued to rise in August, according to CNBC

US Federal Reserve Chairman Jerome Powell explained last Friday that a US interest rate cut was imminent, in reference to concerns about the labor market.

According to CME Group’s FedWatch service, traders are betting on a 65.5% chance that the U.S. central bank will cut rates by 25 basis points next month, with another 34.5% betting on a further 50 basis points.

Personal consumption spending data is due on Friday and could provide further clues on the path of interest rates.

In other precious metals, spot silver rose 1.5% to $29.53 an ounce. Platinum rose 1.3% to $942.06. Palladium rose 3.5% to $979.72.

The dollar fell 0.1%, making gold more attractive to holders of other currencies. U.S. Treasury yields also fell.

Kyle Rodda, a financial markets analyst at Capital.com, said gold looks strong in the long term but a short-term pullback is possible, especially if any data dampens expectations for a rate cut. Non-yielding gold is more attractive in a low interest rate environment.