Gold prices dipped slightly on Friday but remained on track for strong monthly gains in August, supported by growing expectations of a September interest rate cut from the Federal Reserve.
Investor attention was focused on the upcoming U.S. PCE price index, the Fed’s preferred inflation gauge, which is expected to provide further clarity on interest rate plans.
The dollar weakened ahead of the data release and was set for monthly losses, a trend that boosted demand for gold and other metals. Spot gold slipped 0.2% to $3,409.89 an ounce, while October gold futures eased 0.1% to $3,469.92 by 01:48 ET (05:48 GMT).
Gold set for August gains
Gold gained 3.7% in August and was now less than $100 away from its April record high. The rise was driven largely by increasing bets on a September Fed rate cut, especially as U.S. labor market data pointed to cooling conditions.
Fed Chair Jerome Powell acknowledged labor market weakness and signaled that a 25-basis-point cut in September was possible. However, he remained cautious on future easing, citing inflation risks tied to President Donald Trump’s new trade tariffs.
Markets nevertheless priced in an 82.9% chance of a September cut, according to CME’s FedWatch tool. This weighed on the dollar, which was down nearly 2% for August, and lifted broader metal prices.
Silver and platinum outperformed gold with monthly gains of 5.9% and 5%, as investors sought out undervalued alternatives. Copper also advanced, with London Metal Exchange futures up 0.6% to $9,889.50 a ton and COMEX futures higher by 0.6% at $4.5730 a pound. Both contracts were set for monthly gains of between 2.7% and 4.5%.
PCE inflation data in focus
Markets are awaiting the release of July’s PCE inflation data, due Friday, for fresh signals on the Fed’s next move. Core PCE, which strips out volatile items, is expected to rise slightly and remain well above the Fed’s 2% target.
Stronger-than-expected inflation could challenge expectations of near-term cuts, as inflation remains the Fed’s top concern. The data is also expected to shed light on the inflationary impact of Trump’s tariffs, many of which took effect in August.
