02:00 PM EDT, 07/11/2024 (MT Newswires) -- (Updates prices.)

Gold traded at a seven-week high midafternoon on Thursday, spiking back above the US$2,400 mark for the first time since May 22 after U.S. consumer prices rose less than expected last month, sending the dollar and yields sharply lower on expectations the Federal Reserve will soon be ready to cut interest rates.

Gold for August delivery was last seen up US$40.80 to US$2,420.50 per ounce.

The U.S. Bureau of Labor Statistics on Thursday reported the June Consumer Price Index rose at a 3.0% annualized pace in June, down from 3.3% in May and under the consensus estimate for a 3.1% rise, according to Marketwatch. Core CPI, excluding volatile food and energy prices, rose 3.3%, while the consensus estimate expected the rate to be unchanged from May at 3.4%.

The slowing pace of inflation is raising expectations the Federal Reserve is ready to begin lowering interest rates from their current 23-year high, with Fed Chair Jerome Powell this week telling Congress he sees inflation moving lower.

"The hunt for interest rate cuts is experiencing a global groundswell and after New Zealand's RBNZ indicated a tolerance for at least consideration of lower lending costs, the Bank of Korea, while similarly keeping rates at unchanged, indicated that it too was gearing up for cuts. Meanwhile, in his second of speeches to US lawmakers, Jerome Powell played with a straight bat again, but conceded that if data continued in its current good reading the case would build for the Fed to act," PVM Oil Associates noted.

The dollar was sharply lower following the report, with the ICE dollar index last seen down 0.56 points to 104.49.

Treasury yields also sagged, bullish for gold since it offers no interest. The U.S. two-year note was last seen paying 4.519%, down 11.8 basis points, while the yield on the 10-year note was down 9.0 basis points to 4.2%