Gold prices declined on Wednesday as the dollar rose, with investors awaiting a key inflation report in the United States, expected to be released this week. This report is anticipated to provide greater clarity on the expected interest rate cut in September.
In today’s trading, spot gold fell by 0.6% to $2,509.75 per ounce, after reaching a record high of $2,531.60 on August 20. U.S. gold futures also declined by 0.4% to $2,543.20.
At the same time, the dollar index rose by 0.2%, reducing gold’s appeal to foreign currency holders. Market expectations indicate a 66% probability of a 25 basis point rate cut in September, and a 34% probability of a 50 basis point cut, according to the CME FedWatch tool. Gold, which yields no interest, usually thrives in a low interest rate environment.
Federal Reserve Chairman Jerome Powell expressed last week his support for starting interest rate cuts soon and voiced confidence that inflation is close to the Federal Reserve’s target of 2%.
Finally, market participants are now focusing on the U.S. Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred inflation measure, expected to be released on Friday. It is worth noting that a report released on Tuesday showed that U.S. consumer confidence rose to a six-month high in August, despite increasing concerns among Americans about the job market.
