The price of gold rose by about 0.4%, continuing yesterday's rally, and updating a 2-week high, helped by increased expectations of easing the Fed's monetary policy this year. The precious metal was also supported by geopolitical tensions in the Middle East.
Meanwhile, further price increases were limited to the strengthening of the US currency. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.20% to 105.78, reaching its highest level since May 2.
Experts said that in the short term, geopolitical tensions will remain a key factor in the growth of gold prices, especially after the news of the attack on Gaza. On Thursday, several Israeli air strikes in the Gaza Strip killed at least 14 people and wounded dozens of others.
Today's US PMI data may also have an impact on the precious metal. Economists expect the manufacturing PMI to fall to 51.0 in June from 51.3 in May, and the services PMI to drop to 53.7 from 54.8. Weaker-than-expected data may strengthen the case for the start of the Fed's monetary easing cycle in September. According to the CME FedWatch Tool, markets see a 10.3% probability of a 25 basis point rate cut at the Fed meeting in July, a 64.1% probability of a rate cut in September, and a 76.7% probability of monetary policy easing in November. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.