June 3 - Gold prices edged higher on Monday as signs of cooling U.S. inflation lifted hopes for interest rate cuts from the Federal Reserve this year, while traders awaited a slew of U.S. economic data due this week.
"We've had a bit of a pullback, we'd prefer to call it a consolidation. But again, the underpinning positive bias really comes from strong expectation that we are moving towards a interest rate cuts at some point later this year," said David Meger, director of alternative investments and trading at High Ridge Futures.
Traders are currently pricing in about a 56% chance of a cut in September, according to CME FedWatch tool, opens new tab. Lower interest rates decrease the opportunity cost of holding nonyielding bullion. "We still expect a slowdown will allow the Fed to cut interest rates later this year and this should lift gold prices," UBS analyst Giovanni Staunovo said.
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