GOLD headed for a third weekly gain after notching a string of records on expectations of further interest-rate cuts by the US Federal Reserve.
The precious metal traded near its all-time high after the latest US data on inflation and consumer spending reinforced expectations that the US central bank will be on track for more rate cuts in the coming months. The print also fuelled ongoing debate over how big the reductions should be.
The so-called core personal consumption expenditures price index, which excludes volatile food and energy items and is the Fed’s favoured gauge of underlying inflation, increased 0.1 per cent in August from a month earlier. Nominal personal income increased 0.2 per cent and the saving rate eased to 4.8 per cent. Treasury yields and the dollar fell after the readings, helping bullion pare earlier losses.
The Fed kicked off its pivot last week with a half-point cut, and traders have boosted bets on another 75 basis points of reductions this year. Lower rates tend to benefit gold, which does not pay interest.
Gold has rallied by almost a third this year on rate-cut optimism, as well as robust central-bank purchases and heightened geopolitical tension that has driven haven demand. A US presidential election that is too close to call – and could be massively consequential for markets – is less than six weeks away.
Spot gold slipped 0.1 per cent to US$2,669.35 an ounce as of 9.05 am in New York, on track for a 1.8 per cent weekly gain. The Bloomberg Dollar Spot Index fell. Silver and platinum rose, while palladium declined. BLOOMBERG
