Gold futures rise over 1 pct weekly amid rate cuts hopes

Gold futures on the COMEX division of the New York Mercantile Exchange posted gains of 1.03 percent during the trading week ending July 19, which represented its sharpest advance in a month, Trend reports citing Xinhua.

The most active gold contract for August delivery went up 14.50 U.S. dollars weekly, or 1.03 percent, to close at 1,426.70 dollars per ounce on Friday.

As for other precious metals, silver for September delivery added 95.9 cents weekly, or 6.29 percent to close at 16.195 dollars per ounce. Platinum for October delivery was up 17.50 dollars, or 2.1 percent, to settle at 852.10 dollars per ounce.

The gold price is still trading near the highest level in nearly six years and most traders do not think that the trend isn't going to change anytime soon because the Federal Reserve has once again adopted the loose monetary policy.

"The Fed is under pressure to cut the interest rate this year in order to support inflation and this means a weaker dollar," said Naeem Aslam, chief market analyst at TF Global Markets.

Fed Reserve Chairman Jerome Powell, in testimony before House and Senate lawmakers, offered no pushback to market expectations for a rate move when policy makers meet July 30-31, analysts said.

Economic data released earlier this week showed that the New York Fed's Empire State manufacturing survey's main index rebounded 12.9 points to 4.3 in July, which hints there is much room for Fed's monetary operation.

Among economic data Tuesday, U.S. retail sales data revealed a 0.4 percent rise in June, but the cost of imported goods in June fell by 0.9 percent, the steepest amount in six months, while industrial production last month was flat.

On Wednesday, however, data showed that construction of new homes slipped by 0.9 percent to an annual pace of 1.25 million last month.

This stronger-than-expected U.S. economic data had earlier dented expectations for more aggressive interest rate cuts in coming months by the Fed, analysts said. The expectation for lower rates can provide a lift to the precious yellow metal because it doesn't offer a yield.

The Fed's Beige Book, a periodic examination of the U.S. economy said Wednesday the economy is expanding at roughly same "modest" pace as indicated in the last survey.

Comments from New York Fed President John Williams, which have since been moderated by a Fed spokesman, were interpreted as endorsing an aggressive interest-rate cut at the Federal Reserve's policy meeting later this month and sent bond yields and the dollar lower. Both of those market conditions are seen as supportive for gold gains.

Market expectations for Fed interest rate cuts remain relatively high. Fed-funds futures markets are showing a 67 percent probability of a 25-basis-point cut to rates, which currently stand between 2.25 percent-2.50 percent, and a 32 percent chance of a half-point cut to rates, according to CME Group data.