Gold Steady as Softer Inflation Data Tempers Fed Rate-Hike Bets Yvonne Yue Li Gold opened the month steady as softer inflation data lowered bets the Federal Reserve will raise interest rates at its next meeting, while high bond yields left the door open to renewed selling. Bullion was trading around $4,155 an ounce, after falling 0.6% the day before. The Fed’s preferred measure of underlying inflation, the personal consumption expenditure price index excluding food and energy, rose a less-than-expected 0.2% in August.
The prior month was also revised lower. Long-dated Treasury yields rose to multi-decade highs on Wednesday as resilient US spending bolstered expectations that the US economy can handle higher interest rates. The data showing consumer spending rose in August at the fastest pace in over a year led traders to pare back expectations the Fed will raise interest rates in October to a probability of around 34%, down from almost 70% earlier in the week.
Still, elevated yields and lingering tightening risks leave bullion vulnerable to further selling, according to Ewa Manthey, commodity strategist at ING Bank. Gold received some support from the softer PCE reading, taking some pressure off expectations for another rate hike, she said. Gold fell 6% in September, its worst monthly loss since June, after the Fed hiked rates for the first time since 2023 and signaled that further tightening may be needed.
Global bond yields also rose in the month as concerns over mounting government debt and deficits drove up term premiums, increasing the opportunity cost of holding non-yielding gold. Traders will be watching Friday’s jobs report for the next clues on the Fed’s rate outlook. Spot gold was down 0.1% at $4,151.12 an ounce at 8:05 a.m. in Singapore.
Silver was down 0.3% at $60.24 an ounce, after falling 1.7% in the previous session to an eight-week low. Platinum and palladium edged lower. The Bloomberg Dollar Spot Index, a gauge of the US currency, was steady after rising 0.1% the day before to a two-month high.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing