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Gold prices stabilize as US inflation data softens expectations of interest rate cuts
(MENAFN) Gold prices remained stable in early trading on Monday following a 1 percent decline in the previous session, driven by U.S. inflation data suggesting that the Federal Reserve may reduce interest rates less than previously anticipated this month. As of 0015 GMT, spot gold was steady at USD2,502.89 per ounce after hitting a session low of USD2,494.15 on Friday, though the precious metal posted gains over the month of August. Meanwhile, U.S. gold futures saw a slight increase of 0.3 percent to USD2,535 per ounce, reflecting the market's cautious optimism amid fluctuating economic signals.
The recent data showed that U.S. consumer spending rose robustly in July, complicating expectations for a significant interest rate cut by the Federal Reserve. The personal consumption expenditures (PCE) price index, a key inflation measure, increased by 0.2 percent in July, matching forecasts, following a revised 0.1 percent rise in June. This robust consumer spending data has tempered expectations for a half-point rate cut by the Federal Reserve this month, with the current market consensus indicating a 67 percent likelihood of a 25 basis point cut, while only a 33 percent chance is seen for a more substantial 50 basis point reduction, according to the CME FedWatch tool.
In the broader precious metals market, silver rose slightly by 0.2 percent to USD28.89 per ounce, while platinum remained nearly unchanged at USD926.80 per ounce. Palladium experienced a modest gain, increasing by 0.3 percent to USD968.18 per ounce, according to data. The mixed performance in precious metals reflects the market's ongoing uncertainty over the Federal Reserve's policy direction amid a complex economic landscape. Non-yielding assets like gold typically benefit from lower interest rates, which reduce the opportunity cost of holding them, but the path forward remains uncertain as traders await the central bank's next moves.
The recent data showed that U.S. consumer spending rose robustly in July, complicating expectations for a significant interest rate cut by the Federal Reserve. The personal consumption expenditures (PCE) price index, a key inflation measure, increased by 0.2 percent in July, matching forecasts, following a revised 0.1 percent rise in June. This robust consumer spending data has tempered expectations for a half-point rate cut by the Federal Reserve this month, with the current market consensus indicating a 67 percent likelihood of a 25 basis point cut, while only a 33 percent chance is seen for a more substantial 50 basis point reduction, according to the CME FedWatch tool.
In the broader precious metals market, silver rose slightly by 0.2 percent to USD28.89 per ounce, while platinum remained nearly unchanged at USD926.80 per ounce. Palladium experienced a modest gain, increasing by 0.3 percent to USD968.18 per ounce, according to data. The mixed performance in precious metals reflects the market's ongoing uncertainty over the Federal Reserve's policy direction amid a complex economic landscape. Non-yielding assets like gold typically benefit from lower interest rates, which reduce the opportunity cost of holding them, but the path forward remains uncertain as traders await the central bank's next moves.
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