(Bloomberg) -- Gold is holding above US$2,400 an ounce as investor expectations mount that the Federal Reserve is moving closer to cutting interest rates.
A flurry of US economic data including the core consumer price index has signaled that US inflation is cooling, which could give Fed Chair Jerome Powell and his colleagues the confidence they’ll need to cut rates. Activity in the federal funds futures market suggests that bond traders are ramping up bets that the Fed will cut rates by half a percentage point in September instead of the standard quarter-point increment. Lower rates tend to favor non-interest bearing gold.
Spot gold on Friday edged toward the record high of $2,450.07 an ounce reached in May, reversing earlier declines after the Bureau of Labor Statistics published data on US producer prices. The precious metal traded at $2,417.81 at 1:53 p.m. in New York. The Bloomberg Dollar Spot Index dropped 0.4%.
Bullion has rallied 17% this year despite headwinds including high interest rates and sticky inflation, thanks in part to strong central bank buying, investor demand and the metal’s appeal as a haven asset during heightened political risks.
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