Gold Prices Hold Steady Amid Fed Rate Cut Expectations

2 Sep 2024 , 09:38 AM

Gold prices were unchanged on Monday after losing 1% the previous day, as U.S. inflation statistics hinted that the Federal Reserve will lower interest rates less than expected this month.

Spot gold was unchanged at $2,502.89 per ounce, having hit a session low of $2,494.15 on Friday. However, bullion experienced a monthly rise in August.

US gold futures increased 0.3% to $2,535.00.

Data released on Friday revealed that U.S. consumer spending climbed significantly in July, arguing against the Fed’s half-point interest rate cut this month. The personal consumption expenditures (PCE) price index rose 0.2% last month, as expected, following an unrevised 0.1% increase in June.

Non-yielding bullion thrives in a low-interest rate environment.

The Fed is likely to begin a rate-cutting cycle at its monetary policy meeting on September 17-18. According to the CME FedWatch tool, traders currently estimate a 67% possibility of the US central bank cutting interest rates by 25 basis points this month and a 33% chance of a 50-bp cut.

Investors are now anticipating the ADP employment report and the non-farm payroll report from the United States, which are both due later this week.

On the geopolitical front, protests erupted in Israel following the deaths of six captives in Gaza, as discontent with the country’s leadership grew over the failure to reach a ceasefire agreement.

Spot silver nudged up 0.2% to $28.89 per ounce, platinum remained practically unchanged at $926.80, while palladium increased 0.3% to $968.18.

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