Gold prices steadied near a two-week high in Asian trading on Thursday, supported by growing expectations of a September interest rate cut from the Federal Reserve, even as tensions rise between President Donald Trump and the central bank.
Spot gold briefly approached the $3,400 per ounce level this week but pulled back as the dollar firmed and U.S. Treasury yields stabilized.
Concerns over the Fed’s independence remain a key driver of gold prices after Trump attempted to dismiss Fed Governor Lisa Cook. Both Cook and the Fed rejected his authority to do so, with Cook signaling she will take legal action to defend her position.
By 01:37 ET (05:37 GMT), spot gold dipped 0.2% to $3,389.96 per ounce, while October gold futures rose 0.4% to $3,445.32 per ounce.
Fed cut bets strengthen amid Trump clash
The attempted firing has set the stage for a legal showdown between Washington and the Fed. Despite the uncertainty, traders increased bets on a September rate cut, especially after Fed Chair Jerome Powell signaled last week that easing could be possible.
According to CME FedWatch, markets are now pricing in an 84.9% chance of a 25-basis-point cut in September, up from 78.4% the previous week. Powell noted signs of cooling in the labor market but refrained from committing to a clear path of future rate moves, citing uncertainty over inflationary effects from Trump’s policies.
The U.S. dollar weakened this week on rate cut expectations, supporting gold and other metals. Platinum held steady at $1,349.08 per ounce, while silver rose 0.3% to $38.6975 per ounce.
In industrial metals, LME copper futures climbed 0.3% to $9,789.60 a ton, while COMEX copper futures slipped 0.2% to $4.4915 a pound. Analysts noted that lower interest rates typically benefit metals by reducing the opportunity cost of holding non-yielding assets.
U.S. GDP and PCE inflation data ahead
Markets are now awaiting fresh signals on the U.S. economy. A revised second-quarter GDP report is due Thursday, expected to show growth at 3% quarter-on-quarter.
More crucially, Friday’s release of the PCE price index for July, the Fed’s preferred inflation gauge, will be closely watched. Analysts expect inflation to remain steady but above the central bank’s 2% annual target.
