Gold gained for a second day as markets digested the latest US inflation data ahead of a Federal Reserve meeting later this week, where policymakers are expected to set the stage for a September rate cut.
Bullion rose as much as 0.7% in early Asian trading after closing 1% higher on Friday following a report that showed the core personal consumption expenditures price index the Fed’s preferred measure of underlying inflation rose at a tame pace in June. The data reinforced views the US central bank is on the cusp of cutting interest rates.
The precious metal reached a record high earlier this month, although those gains have been unwound as traders waited for firmer messaging from the Fed on the timing of its long-anticipated pivot to looser policy. Lower borrowing costs are typically beneficial for gold, as it doesn’t pay interest.
Fed officials are likely to signal a cut is likely coming in September at the conclusion of its gathering on Wednesday, according to economists surveyed by Bloomberg News, a move they say will kick off reductions each quarter through 2025. Swaps markets are fully pricing a September move, with a chance of two more by year-end.
Gold is up about 16% this year. Along with bets on rate cuts, it’s been supported by strong demand from central banks, while ongoing geopolitical tensions and the tumultuous US presidential campaign have boosted its appeal as a safe-haven asset.
Spot gold was up 0.5% to $2,398.50 as of 7:52 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed. Silver, platinum and palladium all climbed.
Source : Bloomberg
