Gold prices edged slightly lower on Friday but remain on track for strong August gains, supported by growing expectations of an interest rate cut by the Federal Reserve in September.
Investor attention is now focused on the upcoming U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, for further guidance on the central bank’s policy path.
The dollar retreated ahead of the PCE release and is positioned for losses in August, benefiting gold and other metals. Spot gold fell 0.2% to $3,409.89 per ounce, while October gold futures dipped 0.1% to $3,469.92/oz as of 01:48 ET (05:48 GMT).
Gold Set for Monthly Gains on Rate Cut Bets
Spot gold is up 3.7% for August and is now less than $100 shy of its April record high. Gains have been driven primarily by rising bets on a Fed rate reduction, amid signs of cooling in the U.S. labor market.
Fed Chair Jerome Powell acknowledged the labor market slowdown and indicated a potential 25-basis-point cut in September, though he remained cautious about further easing due to inflationary risks from President Donald Trump’s tariffs.
Market expectations for a September rate cut have grown, with CME FedWatch assigning an 82.9% probability of a 25-basis-point reduction next month. The softer dollar and rising rate cut bets have supported broader metal prices, which are also trending higher for August. The dollar index is down nearly 2% for the month.
Platinum and silver are outperforming gold, rising 5% and 5.9% respectively, as investors take advantage of their relatively discounted prices. Copper futures also climbed, with London Metal Exchange copper up 0.6% at $9,889.50 a ton and COMEX copper rising 0.6% to $4.5730 a pound, putting both contracts on track for August gains of 2.7–4.5%.
Eyes on PCE for Rate Guidance
All eyes are on the PCE report later Friday, particularly core PCE, which is closely monitored by the Fed. Headline PCE inflation is expected to remain stable, while core PCE may show a slight increase in July, staying well above the Fed’s 2% target.
Investors are watching closely for any indications of persistent inflation, which could affect the Fed’s rate cut plans. August’s data will also shed light on the inflationary impact of Trump’s trade tariffs, many of which came into effect during the month.
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