Gold firms as soft US data pressures dollar, fuels rate-cut bets

Gold prices inched higher on Wednesday (Aug 13), supported by a weaker US dollar after tame US inflation data cemented bets for an interest rate cut in September, although a trade war truce between Washington and Beijing kept bullion’s gains in check.

Spot gold was up 0.1 per cent at US$3,347.09 per ounce, as at 9.12 am. US gold futures for December delivery were steady at US$3,397.50.

Data released on Tuesday showed that the US Consumer Price Index (CPI) rose 0.2 per cent in July, following a 0.3 per cent increase in June. On a year-over-year basis, the CPI climbed 2.7 per cent.

Economists polled by Reuters had expected the CPI to rise 0.2 per cent in July and increase 2.8 per cent year on year.

The US dollar index stood at 98.02, after falling roughly 0.5 per cent on Tuesday. A weaker US dollar make greenback-denominated assets more affordable to holders of other currencies.

Markets are pricing in about a 90 per cent chance of a rate cut in September, with at least one additional cut expected by the end of the year.

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Non-yielding gold thrives in a low-interest-rate environment.

US President Donald Trump has nominated White House adviser Stephen Miran to temporarily fill a vacant board seat at the US Federal Reserve, stirring up speculation about presidential interference in monetary policy.

Meanwhile, Kansas City Fed president Jeffrey Schmid said the US central bank should not take the tariffs’ muted effect on inflation so far as an opportunity to cut interest rates, but rather as a sign that monetary policy is “appropriately calibrated”.

The United States and China have extended a tariff truce for another 90 days, staving off triple-digit duties on each other’s goods.

Focus now shifts to US economic data, scheduled for later this week, including the US Producer Price Index, weekly jobless claims, and retail sales.

Elsewhere, spot silver edged 0.1 per cent higher to US$37.92 per ounce, platinum rose 0.2 per cent to US$1,338.75 and palladium eased 0.1 per cent to US$1,128.15. REUTERS