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Gold prices inched higher on Wednesday as mild US inflation data cemented expectations for a Federal Reserve rate cut next month and raised the odds of additional monetary easing later this year.
Spot gold was up 0.3% at $3,356.98 per ounce by 1:15 p.m. ET, rebounding from a one-week low from the previous session. US gold futures also gained 0.3%, trading at $3,408.20 an ounce in New York.
Meanwhile, the US dollar index hit a more than two-week low, making gold cheaper for overseas buyers. Further supporting bullion, the yield on benchmark 10-year US Treasury note edged lower.
“Gold is buoyant on heightened expectations of a September Fed rate cut, following benign CPI data and July’s weak non-farm payrolls,” Nikos Tzabouras, senior market analyst at Tradu.com, said in a note to Reuters.
Markets are pricing in a 97% chance of a September Fed cut after mild July inflation data signalled limited pass-through from US President Donald Trump’s sweeping import tariffs, following weak jobs data earlier this month.
Investors now await further indicators this week, including the producer price index, weekly jobless claims, and retail sales.
“If gold were to take out recent resistance around $3,400, it would likely be driven more by geopolitical developments than by economic data,” Fawad Razaqzada, market analyst at City Index and FOREX.com, added.
“While I maintain a bullish long-term outlook on gold, my view for the rest of this year is more cautious. Prices may continue to consolidate or see a mini correction in the coming months as equity markets rally aggressively.”
Gold, a traditional safe-haven asset, has risen by nearly 30% this year on heightened geopolitical risks and increased central bank demand.
(With files from Reuters)