Spot Gold eased slightly, but still held not far from an all-time high of $3,790.82/oz. on Friday, as US data prompted investors to scale back expectations of further Federal Reserve rate cuts this year.
The latest macro data showed weekly US jobless claims had dropped, while the economy had expanded at a faster pace than anticipated in the second quarter.
Markets are now pricing in about an 88% chance of a 25 basis point Fed rate cut in October and a 34% chance of another 25 bps cut in December.
Market players next awaited the US PCE inflation report for fresh clues on the Federal Reserve’s monetary policy trajectory.
Annual core PCE inflation probably remained steady at 2.9% in August, according to market consensus, while annual PCE inflation probably accelerated to 2.7% from 2.6% in July.
Federal Reserve Chair Jerome Powell said this week the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.
“Gold is trading in somewhat sluggish fashion, with traders reluctant to get on board with any real conviction in case the core PCE data even vaguely mirrors the jump higher in GDP print,” KCM Trade Chief Market Analyst Tim Waterer was quoted as saying by Reuters.
Spot Gold was last down 0.01% on the day to trade at $3,748.89 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 42.85%.
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