Gold Trims Weekly Gain as Traders Mull US Data, Rate-Cut Bets

Gold trimmed its weekly gain as traders digested fresh US data, capping a week that saw the precious metal notch a string of records on expectations of further interest-rate cuts by the US Federal Reserve.

(Bloomberg) — Gold trimmed its weekly gain as traders digested fresh US data, capping a week that saw the precious metal notch a string of records on expectations of further interest-rate cuts by the US Federal Reserve.

While 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, it also fueled 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 favored gauge of underlying inflation, increased 0.1% in August from a month earlier. Nominal personal income increased 0.2% and the saving rate eased to 4.8%. 

The precious metal pared early declines on the data, trading near its all-time high, before dropping again. It’s still on course for a weekly advance of 1%, for a third straight week of gains.

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 doesn’t 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’s driven haven demand. A US presidential election that’s too close to call — and could be massively consequential for markets — is less than six weeks away.

Spot gold slipped 0.9% to $2,647.60 an ounce as of 11:45 a.m. in New York. The Bloomberg Dollar Spot Index fell. Silver, platinum and palladium all declined.

—With assistance from William Clowes.