ADVERTISEMENT

Investing

Gold Trims Monthly Gain on Bets for Measured Pace of Rate Cuts

An employee stacks gold bars in a safety deposit box in the precious metals vault at Pro Aurum KG in Munich, Germany, on Wednesday, July 22, 2020. Silver jumped to the highest in almost seven years and gold continued its march toward a record on expectations there’ll be more stimulus to help the global economy recover from the coronavirus pandemic. Photographer: Andreas Gebert/Bloomberg (Andreas Gebert/Bloomberg)

(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. 

©2024 Bloomberg L.P.