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Gold Rises on US Interest Rate Cut Bets
Gold prices rose on Friday, September 26, after US inflation data came in line with expectations, reinforcing expectations that the Federal Reserve will continue to cut interest rates later this year.
Spot gold rose 0.8% to $3,777.79 per ounce, after hitting a record high of $3,790.82 earlier in the week.
The precious metal has risen about 2.5% this week.
US gold futures for December delivery rose 1% to $3,807.90.
The Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, showed that core inflation, which excludes food and energy costs, rose at a seasonally adjusted annual rate of 2.9% in August. This was in line with economists' expectations.
The All Items Index showed an annual rate of 2.7%, in addition to a monthly increase of 0.3%, also in line with expectations.
“Gold is holding steady around the $3,700 range, given the latest US economic indicators, which reduce the likelihood of a Fed rate cut by the end of 2025, with those odds falling by as much as 18 percentage points this week,” said Han Tan, senior market analyst at Nimo.Money.
Investors now see 87% and 62% odds of rate cuts in October and December, respectively, down from 91% and 76% prior to the data release, according to the CME FedWatch tool.
The dollar index is hovering near a three-week high, making dollar-denominated gold more expensive for holders of other currencies.
US data yesterday showed a decline in weekly jobless claims, along with faster-than-expected economic growth in the second quarter, driven by strong consumer spending and business investment.
Gold typically tends to rise in a low interest rate environment.
