Gold holds ground as investors await US data for more Fed cues

[BENGALURU] Gold prices remained stable on Thursday (Aug 28), as market participants awaited US economic data due this week that could help shed further light on the Federal Reserve’s interest rate trajectory.

Spot gold held its ground at US$3,390.91 per ounce, as at 9.12 am, after hitting its highest point since Aug 11 earlier in the session.

US gold futures for December delivery was flat at US$3,446.70.

Investors are now awaiting the release of the Personal Consumption Expenditures (PCE) price index, the preferred inflation measure of the US Fed, scheduled for Friday.

Economists polled by Reuters expect the PCE price index to rise 2.6 per cent in July, matching the climb from the prior month.

Markets are anticipating an over 88 per cent chance of a 25-basis-point rate cut at the Fed’s policy meeting next month, according to the CME FedWatch Tool.

Non-yielding gold typically performs well in a low-interest-rate environment.

New York Fed Bank president John Williams said on Wednesday that it is likely interest rates can fall at some point, but policymakers will need to see what upcoming data indicate about the economy to decide if it’s appropriate to make a cut next month.

The US dollar opened weaker on Thursday as traders increased bets on a Fed interest rate reduction next month following comments from the Fed’s Williams.

A weaker US dollar makes gold less expensive for the other currency holders.

Meanwhile, Fed governor Lisa Cook’s lawsuit against US President Donald Trump’s effort to fire her could be filed soon, CNBC reported, citing sources.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.27 per cent to 962.50 tonnes on Wednesday from 959.92 tonnes on Tuesday.

Elsewhere, spot silver was up 0.1 per cent at US$38.66 per ounce, platinum eased 0.3 per cent to US$1,343.69, and palladium climbed 0.3 per cent to US$1,094.42. REUTERS