Gold poised for weekly fall as bets fade for big Fed rate cut

[BENGALURU] Gold was subdued on Friday (Aug 15) and was heading for a weekly fall, as hotter-than-expected US inflation data dented expectations for a super-sized 50 basis points US interest rate cut in September.

Spot gold was down 0.1 per cent at US$3,333.58 per ounce, as at 9.20 am. Bullion has fallen 1.9 per cent for the week. US gold futures for December delivery eased 0.1 per cent to US$3,378.90.

The Labor Department reported the US producer price index (PPI) rose 3.3 per cent year on year in July, beating forecasts of 2.5 per cent, while weekly jobless claims were lower than expected at 224,000 versus 228,000 forecast.

This comes after data on Tuesday showed that US consumer prices increased marginally in July, increasing the chances of a US Federal Reserve rate cut next month.

While Thursday’s hot PPI data did not dent chances of a Fed rate cut in September, it hurt the case for the Fed to resume cutting rates with a 50 bp reduction.

St Louis Fed president Alberto Musalem on Thursday said that a half-point rate cut at the Fed’s September meeting is not warranted, a day after Treasury Secretary Scott Bessent said it was possible.

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

Investors will next focus on whether Fed chair Jerome Powell offers any fresh clues on policy at the US central bank’s annual economic policy symposium in Jackson Hole, Wyoming, next week.

On the geopolitical front, investors are tempering expectations that Friday’s summit between Donald Trump and Vladimir Putin will deliver a significant breakthrough on the war in Ukraine despite some hopeful sign.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said that its holdings fell 0.3 per cent to 961.4 tonnes on Thursday from 964.2 tonnes on Wednesday.

Elsewhere, spot silver rose 0.2 per cent to US$37.89 per ounce, platinum fell 0.3 per cent to US$1,351.78, and palladium slipped 0.4 per cent to US$1,140.69. REUTERS