Gold held on for a small gain, with traders looking to US inflation data this week for clues on the size of the expected rate cut by the US Federal Reserve at its meeting next week.
Gold was trading near $2,500 an ounce, after rising 0.4% in the previous session, as traders prepared for the US consumer price index report due on Wednesday 9/11. The data is expected to show a 2.5% increase in August from a year earlier, which would be the smallest increase since 2021.
Fed policymakers signaled they are ready to kick off a series of interest rate cuts at the US central bank’s meeting in two weeks.
Their remarks suggested a likely quarter-point rate cut, with potential for larger reductions if the job market weakens further.
Fed funds futures traders are now pricing a 71 per cent chance of a 25-basis point (bp) cut at the Fed’s Sep 17 to 18 meeting, and a 29 per cent chance of a 50 bp reduction, according to the CME FedWatch Tool.
A low-interest rate environment tends to boost non-yielding bullion’s appeal.
This week, traders will be watching for the August US Consumer Price Index due on Wednesday, followed by Producer Price Index on Thursday.
Meanwhile, China’s central bank held back on buying gold for its reserves for a fourth straight month in August, official data showed on Saturday.
Elsewhere, gold discounts in India surged to a seven-week high last week as rising prices hurt demand, while traders and analysts noted that Asian consumers would likely utilize any price declines.
Spot silver rose 0.3 per cent to US$28.01 per ounce, platinum gained 0.3 per cent to US$924.02 and palladium was up nearly 1 per cent at US$919.76.
