Gold set to post monthly gain

Gold prices edged lower on Friday, but were set for a monthly gain ahead of US inflation data that will provide more cues on the Federal Reserve’s rate cut trajectory.

Spot gold was down 0.1 per cent at $3,414.07 per ounce, as of 0818 GMT. Bullion has gained 3.6 per cent in August and hit $3,423.16 on Thursday, its highest level since July 23.

US gold futures for December delivery eased 0.1% to $3,471.70.

“Besides the dollar’s slight advance, gold is also feeling the gravitational forces typically found around big, round numbers. Markets appear reluctant to let gold stray far from the psychological $3,400 level ahead of PCE data,” said Han Tan, chief market analyst at Nemo.Money.

The dollar rose, but was set for a monthly drop of 2.2%. Benchmark 10-year yields were slightly above a two-week low hit on Thursday, but were headed for a monthly loss.

All eyes are on the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, due later in the day.

“As long as the uptick in inflation is not worse than feared, bullion bulls should be able to hold their ground above $3,400. However, if the PCE prints dash market expectations for Fed rate cuts this year, spot gold may slide back into sub-$3,400 domain once more,” Tan said.

Non-yielding gold typically performs well in a low-interest-rate environment. Fed Governor Waller on Thursday stepped up his call for cutting short-term US borrowing costs, saying he would support an interest rate cut next month.

Reuters