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United States. Federal Reserve Board

Gold Prices Poised for Best Monthly Performance Since April

Strategic Insights

— 1 min read

As US inflation data reinforced expectations of a potential interest rate cut by the Federal Reserve, gold prices held steady on Friday, with spot gold up 0.1% at $3,419.59 per ounce. This gain comes amid a 3.9% increase in gold prices in August so far. The dollar, which rose but is set for a monthly drop of 1.9%, makes gold less expensive for overseas buyers. US consumer spending increased solidly in July, while underlying inflation picked up due to tariffs on imports. The US Personal Consumption Expenditures Price index rose 0.2% month-on-month and 2.6% on a year-on-year basis, in line with expectations.

Key Takeaways:

  • Gold prices are poised for their best monthly performance since April, with a 3.9% gain in August so far.
  • US inflation data reinforced expectations of a potential interest rate cut by the Federal Reserve.
  • The dollar is set for a monthly drop of 1.9%, making gold less expensive for overseas buyers.
  • US consumer spending increased solidly in July, with the US Personal Consumption Expenditures Price index rising 0.2% month-on-month and 2.6% on a year-on-year basis.
  • Traders increased their bets on a 25-basis point rate cut by the US central bank at the September policy meeting to an 89% probability.
  • Non-yielding gold typically performs well in a low-interest-rate environment.
  • A federal judge will consider whether to block President Donald Trump from firing Federal Reserve Governor Lisa Cook.
  • Gold ETFs saw inflows of just under 15 tons in the last two days, benefiting from uncertainty around Fed independence.
  • The upside for gold above $3,400 is looking increasingly limited.

Statistics:

  • Spot gold prices: $3,419.59 per ounce
  • Gold prices in August: 3.9% gain
  • US dollar: set for a monthly drop of 1.9%
  • US Personal Consumption Expenditures Price index: 0.2% month-on-month, 2.6% year-on-year
  • Traders' bets on a 25-basis point rate cut: 89% probability
  • Gold ETFs: inflows of just under 15 tons in the last two days

Sources:

  • Reuters
  • High Ridge Futures
  • Commerzbank

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