(Bloomberg) -- Gold prices dipped on Friday, trimming this month’s advance, as Treasury yields and the dollar pushed higher after a key US inflation gauge reinforced bets that the Federal Reserve’s pace for rate cuts will be measured.
The Fed’s preferred measure of underlying US inflation rose at a mild pace and household spending picked up in July. The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 0.2% from June, according to Bureau of Economic Analysis data out Friday.
Still, bullion is on track for a monthly gain of more than 2% after advancing 5.2% in July. The precious metal has risen more than 20% this year, with its recent leg up largely tied to growing optimism that the US central bank will soon start cutting rates from a more than two-decade high to help the economy. Lower borrowing costs help alternative-asset demand for gold, which doesn’t bear interest.
Robust over-the-counter purchases and strong haven demand amid conflicts in the Middle East and Ukraine also helped the metal’s advance this year.
TD Securities see some near-term downside for gold as “positioning cues are flashing red on several fronts,” with macro funds positions particularly extreme, according to senior commodity strategist Daniel Ghali. A move lower toward $2,430 an ounce could trigger liquidation, according to Ghali.
Spot gold was down 0.8% at $2,502.32 an ounce at 2:23 p.m. in New York, after peaking at a record of $2,531.75 last week. The Bloomberg Dollar Spot Index was up 0.2%. Silver, platinum, and palladium all fell.
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