Spot Gold edged up on Monday, while holding not far from a six-week peak of $4,264.70/oz. ahead of the Federal Reserve’s final policy meeting for this year, where a rate cut is largely expected.
Annual PCE inflation in the US has accelerated to 2.8% in September, or the highest level since April 2024, from 2.7% in August. That figure came in line with market expectations.
And, annual core PCE inflation has eased to 2.8% in September from 2.9% in August, a delayed report due to the government shutdown showed.
The rate cut case has also been bolstered by weak US labor market data and dovish comments by Fed Governor Waller and New York Fed President Williams.
Markets are now pricing in about an 87% chance of a 25 basis point Fed rate cut at the December meeting, compared to an 85.5% chance a week earlier.
Markets are also pricing in two additional interest rate cuts by the end of 2026.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of future interest rate cuts as well as to the new set of FOMC economic forecasts.
The minutes from the Federal Reserve’s October meeting revealed that interest rates had been lowered even as policy makers cautioned that such a move could risk entrenched inflation and a loss of public trust in the financial institution.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last up 0.29% on the day to trade at $4,210.83 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Its current all-time high stands at $4,381.21/oz.
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