A pause in a step-by-step US rate rise has a positive effect on gold quotes. A weaker dollar increases oil and commodities prices as well as the cost of the US stock market. Gold prices continued to grow at Asian and European trading sessions today following a sharp consolidation amid US disappointing NFPR in May. On Tuesday the US dollar dropped to monthly lows against major currencies. Investors go on reacting to the worsening prospects of the US rate rise. The WSJ index tracing the USD cost against a basket of 16 currencies dropped 0.4% to 86, which is the lowest value since 5th May.
Downbeat statistics on US consumer lending published on Tuesday also contributed to the dollar's further weakening. US consumer lending grew by as little as 13.42 billion dollars against a forecast of 18 billion dollars.
Following COMEX trades, August's gold futures dropped to 1247.00 USD per troy ounce on Monday and Tuesday.
However, Fed Head Janet Yellen did not regard the weak NFPR report as a catastrophe in her Monday's statement. What's more, the unemployment rate dropped from 5.0% to 4.7% in May. Jannet Yellen stated that Fed may gradually raise short-term interest rates without specifying an exact time.
The gold alone does not yield investment profits and higher interest rates make it less competitive over profit-yielding assets, such as US T-bonds.
No strong news drivers for the USD are expected in the economic calendar till the end of the week.
Traders' attention is now riveted on the probability of the US interest rate rise at Fed's July meeting. As for 15th June, the rise probability tends to zero. The gold price therefore is likely to continue growing.