Gold Set for Monthly Decline Amid Anticipation of US Inflation Data

Gold prices fell on Wednesday, heading for a monthly loss, as expectations of interest rate hikes weighed on market sentiment while investors awaited U.S. inflation data for clues about the Federal Reserve’s next monetary policy move.

Spot gold fell 0.2 percent to $4,170.63 per ounce by 01:50 GMT, having lost more than 6 percent since the start of the month.

The U.S. Personal Consumption Expenditures (PCE) price index is scheduled for release at 12:30 GMT.

Tony Seg, CEO of Critical Metals, said, “The release of the PCE data will be a key test for gold, as it could influence U.S. monetary policy expectations, Treasury yields, and the dollar.”

He added, “A weaker reading is likely to support gold and pave the way for a return to the $4,200–$4,300 range, while a stronger reading could push yields and the dollar higher, placing fresh pressure on gold and testing the $4,100 level.”

According to CME Group’s FedWatch tool, traders see a 47 percent probability of the Federal Reserve raising interest rates in October and a 91 percent probability of a hike in December.

The U.S. central bank raised interest rates by 25 basis points earlier this month.

Meanwhile, New York Fed President John Williams said policymakers may need to raise rates only once more this year to bring inflation back on track toward the central bank’s 2 percent target.

On the geopolitical front, Qatar expressed hope that its diplomatic mediation efforts between Iran and the United States would lead to a breakthrough, even after U.S. President Donald Trump denied reports suggesting he was prepared to ease sanctions on Tehran and release frozen funds in exchange for concessions on its nuclear program.

In other precious metals, spot silver fell 0.8 percent to $60.98, platinum held steady at $1,705.10, and palladium dropped 0.3 percent to $1,219.60. All three metals are heading for monthly declines.