Gold settles on interest rate cut speculation as markets look to US inflation data

(MENAFN) On Wednesday, gold prices held steady as recent U.S. producer price data fueled optimism that an interest rate cut could be on the horizon. Spot gold was priced at USD2,465.27 per ounce as of 0158 GMT, with U.S. gold futures slightly declining by 0.1 percent to USD2,504.50. The focus of traders has now shifted towards the upcoming U.S. inflation data, which is expected to provide further insights into the Federal Reserve's future policy decisions.

The anticipation of a rate cut was bolstered by Tuesday’s report showing that U.S. producer prices increased less than anticipated in July. This development has strengthened the market's belief that the current trend of slowing inflation could prompt the Federal Reserve to lower interest rates sooner rather than later. The U.S. Consumer Price Index (CPI) data for July, set to be released on Wednesday, is expected to indicate a 0.2 percent rise in inflation on a monthly basis. Additionally, upcoming retail sales data, scheduled for Thursday, will further inform market expectations regarding the Fed's policy trajectory.

Market sentiment is leaning towards a 54 percent probability that the Federal Reserve will implement a 50 basis point rate cut in September, with another reduction expected in December, according to the CME FedWatch tool. In a low-interest-rate environment, gold, which does not offer a yield, typically becomes more attractive to investors. Among other precious metals, spot silver saw a slight decline of 0.15 percent to USD27.80 per ounce, while platinum edged up by 0.2 percent to USD938.25. Palladium also experienced a modest increase of 0.18 percent to USD940.25 per ounce, continuing its upward momentum from the previous session where it reached its highest level since July 24.

MENAFN14082024000045015682ID1108552769