Onome Amuge
Gold edged higher, extending a week of gains, after US inflation figures aligned with forecasts and reinforced investor expectations that the Federal Reserve will proceed with interest rate cuts later this year.
Spot gold rose 0.8 per cent to $3,778.62 per ounce, not far from the record $3,790.82 reached earlier in the week. US gold futures for December delivery settled 1 per cent higher at $3,809. The metal has advanced about 2.5 per cent this week, showcasing renewed appetite for safe-haven assets.
The US Commerce Department reported that the core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 2.7 per cent in August from a year earlier, in line with expectations. Personal income and spending, however, came in slightly stronger than consensus.
“Monthly PCE data is in line, though personal income and spending were a tenth above expectations. Nothing from this data will prevent the Fed from carrying on with another cautious rate cut at the October meeting,” said Tai Wong, an independent metals trader.
Futures markets are now pricing in an 88 per cent probability of a Fed cut in October and a 65 per cent chance of another in December, according to CME’s FedWatch Tool. Investors will be watching closely for comments from Richmond Fed president Thomas Barkin and vice-chair Michelle Bowman later on Friday for further policy signals.
Gold typically benefits when borrowing costs fall, as lower yields reduce the opportunity cost of holding non-yielding assets. The anticipation of looser monetary policy has weighed on the dollar in recent sessions, further supporting the bullion rally.
The rally was not confined to gold. Spot silver jumped 2.6 per cent to $46.41 an ounce, its highest level in more than 14 years. Platinum added 2.5 per cent to $1,568.21, the strongest since 2012, while palladium gained 2.8 per cent to $1,284.77.
Analysts said investors seeking cheaper alternatives to gold were driving flows into silver and platinum. Silver has also benefited from expectations of rising industrial demand, particularly in solar energy, after Chinese president Xi Jinping pledged to cut China’s net carbon emissions by 7–10 per cent by 2035. Silver is a key component in photovoltaic cells.
Momentum was also boosted by supply concerns in base metals, with Freeport-McMoRan declaring force majeure at its Grasberg copper mine in Indonesia, one of the world’s largest. “That news helped sentiment across the complex, reminding investors how tight some of these supply chains remain,” Wong said.
The metals rally comes against a backdrop of renewed trade tensions. President Donald Trump recently announced fresh tariffs on imported drugs, trucks and furniture, effective October 1, raising concerns over global growth.
Yet the trade moves appear to have had only limited impact on investor risk appetite, with traders instead focusing on the Fed’s dovish tilt and the resilience of US growth data.
Market participants say bullion’s trajectory will hinge on the Fed’s ability to balance inflation control with support for growth. A more hawkish stance could cap gold’s rally, but sustained expectations of lower borrowing costs are likely to keep investor interest elevated.
