Spot Gold was little changed just above the $2,500 per troy ounce mark on Tuesday ahead of the essential US CPI inflation data that could provide further clues over the size of the potential interest rate cut by the Federal Reserve this month.
Annual headline consumer inflation in the United States probably eased to 2.6% in August, according to market consensus, from 2.9% in July.
Annual core CPI inflation probably steadied at 3.2% in August, which has been the lowest rate since April 2021.
Lower-than-expected inflation could raise the odds of a larger interest rate cut, which may support Gold, according to DHF Capital’s Bas Kooijman.
Last week’s data showed US jobs growth below market consensus, but a stable wage growth and a drop in the unemployment rate to 4.2% implied the labor market was not weakening substantially. This, to an extent, reduced the need for a super-sized rate cut at the Fed’s policy meeting next week.
Markets are now pricing in about a 27% chance of a 50 basis point Fed rate cut in September and a 73% chance of a 25 basis point rate cut.
As of 8:04 GMT on Tuesday Spot Gold was edging down 0.17% to trade at $2,502.19 per troy ounce.
Gold Futures for delivery in December were down 0.07% on the day to trade at $2,530.90 per troy ounce.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was little changed at 101.650 on Tuesday.
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