Gold and Metals Rise Amid Growing Fed Rate Cut Bets

Gold prices eased slightly on Friday but remained on track for strong gains in August, driven by growing expectations of a September rate cut by the Federal Reserve.

• Spot gold: $3,409.89/oz (-0.2%)
• Gold futures (October): $3,469.92/oz (-0.1%)
• August performance: Up 3.7%, approaching April record highs

Drivers of gold strength:

• Dollar weakness: The greenback retreated in anticipation of U.S. PCE inflation data, boosting gold and other metals.
• Fed expectations: CME FedWatch shows an 82.9% chance of a 25-bps cut in September, supported by signs of a cooling U.S. labor market.
• Inflation caution: Fed Chair Powell acknowledged labor market cooling but remained cautious about easing due to trade tariffs impacting inflation.

Other metals:

• Platinum: +5% in August
• Silver: +5.9% in August
• Copper (LME): $9,889.50/ton (+0.6%)
• Copper (COMEX): $4.5730/lb (+0.6%)
• Metals outperformed gold as investors sought discounted opportunities.

Upcoming focus:

• U.S. PCE price index: Core PCE expected to rise slightly, still above the Fed’s 2% target.
• Impact: Sticky inflation could delay or limit rate cuts, while August’s data will reveal the effect of Trump’s tariffs on prices.

In short, gold and metals have benefited from a weaker dollar and rate cut expectations, but all eyes are on PCE inflation data to gauge whether the Fed will follow through with easing.