Gold Rises as Softer US Inflation Reduces October Fed Hike Bets

Post by : Saif

Gold prices moved higher on Thursday after softer-than-expected US inflation data reduced expectations that the Federal Reserve will raise interest rates again in October. Investors are now watching the upcoming US jobs report for fresh signals about the central bank's next policy move.

Spot gold rose 0.5% to $4,175.19 per ounce by 0417 GMT, while US gold futures for December delivery gained 0.4% to $4,204.80. The move came after gold suffered a monthly decline of more than 6% in September.

US Inflation Comes in Below Expectations

Data released on Wednesday showed that the US Personal Consumption Expenditures (PCE) price index increased 0.3% in August from the previous month, below economists' expectation of 0.4%. Core PCE inflation, which excludes food and energy, rose 0.2% during the month and was up 3% from a year earlier.

The figures gave financial markets some relief over the possibility of another immediate rate increase. Market pricing showed the probability of an October hike falling to around 38%, according to the Reuters report.

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Why Interest Rates Matter for Gold

Gold does not pay interest or dividends. When interest rates rise, interest-bearing assets can become more attractive compared with bullion.

Expectations of fewer or later rate increases can therefore support gold prices by reducing pressure from higher borrowing costs and interest rates.

However, the US dollar remained close to a two-month high, limiting gold's gains. A stronger dollar generally makes gold more expensive for buyers using other currencies.

US Jobs Data in Focus

Investors are now waiting for the US nonfarm payrolls report due on Friday. Employment data could influence expectations about the Federal Reserve's next interest-rate decision.

The inflation report showed some moderation in price pressures, but consumer spending remained strong. US personal consumption expenditures increased 0.9% in August, while real PCE rose 0.6%, according to the US Bureau of Economic Analysis.

That combination leaves markets watching both inflation and employment conditions before drawing conclusions about the Fed's next move.

Other Precious Metals Also Gain

Other precious metals also moved higher on Thursday. Spot silver gained 1.2% to $61.11 an ounce, platinum rose 0.7% to $1,717.35, and palladium increased 0.3% to $1,207.12.

Gold's September decline remains significant, but the latest inflation figures have provided some support at the beginning of October. Investors will now focus on US employment data and further economic indicators for clues about the direction of Federal Reserve policy.

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