Gold prices held steady on Monday as investors shifted focus to upcoming U.S. inflation data for signals on the Federal Reserve’s policy direction. While expectations of a September interest rate cut supported bullion, a stronger dollar limited gains. The market is awaiting Friday’s release of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge.
Market Performance
Spot gold rose 0.1% to $3,373.49 per ounce by late morning trading, after reaching its highest level since August 11 on Friday. U.S. gold futures for December delivery were flat at $3,418.60. The U.S. dollar strengthened 0.4% against major currencies, making gold more expensive for international buyers.
Fed Outlook and Investor Sentiment
Comments from Fed Chair Jerome Powell last week fueled optimism about potential rate cuts. Powell acknowledged rising risks to the labor market but emphasized that inflation concerns remain. Analysts now assign an 86% probability of a 25-basis point cut at the Fed’s September meeting, according to the CME FedWatch Tool. “The market is absorbing Powell’s comments as we await fresh inputs that might give a better indication of the likelihood of a September rate cut,” said Peter Grant of Zaner Metals, who also predicted that gold’s uptrend will strengthen in the weeks ahead.
Focus on PCE Data
The upcoming PCE report is expected to show core inflation rising to 2.9%, its highest since late 2023. The data will be crucial in shaping market expectations for the Fed’s policy path and could influence gold’s next move. Lower interest rates generally support non-yielding assets like gold, as they reduce the opportunity cost of holding bullion.
Other Precious Metals
In other markets, silver held steady at $38.81 per ounce after reaching a near one-month peak on Friday. Platinum fell 1.7% to $1,338.62, while palladium dropped 2.7% to $1,096.27. These declines underscored mixed sentiment across the precious metals complex, even as gold continued to find support from rate cut expectations.
Gold prices remain steady as investors balance optimism over potential Fed easing with the drag of a stronger dollar. With the PCE inflation data due Friday, traders are watching closely for confirmation of a September rate cut that could provide the next catalyst for bullion’s upward trend.
