Gold prices held close to historic peaks on Thursday, despite a modest pullback in Asian trading, as investors weighed upcoming U.S. inflation data against strong expectations for a Federal Reserve interest rate cut next week.
Spot gold fell 0.4% to $3,627.59 per ounce by 02:04 ET (06:04 GMT), while December U.S. gold futures slipped 0.5% to $3,664.30. Earlier this week, gold reached an all-time high of approximately $3,673.95.
Weaker U.S. Inflation Data Fuels Rate Cut Speculation
The softer-than-expected U.S. producer price index for August, combined with upward revisions to employment data, reinforced signs of a cooling labor market and heightened expectations of Fed easing. Traders are now largely pricing in a 25-basis-point rate cut at next week’s Fed meeting, with some considering the possibility of a larger reduction.
All eyes are now on Thursday’s consumer price index (CPI) release, which is forecasted to show a 0.3% monthly increase and a 2.9% year-on-year rise. A CPI reading above expectations could temper gold’s rally by reducing confidence in aggressive rate cuts.
Political Developments Provide Additional Support
Gold’s appeal has also been underpinned by concerns about the Federal Reserve’s independence. A federal judge temporarily blocked President Donald Trump’s attempt to remove Fed Governor Lisa Cook, triggering investor worries over political interference in monetary policy. The administration has appealed the ruling, leaving uncertainty in place.
Lower interest rates tend to benefit gold, as they reduce the opportunity cost of holding the non-yielding asset. The U.S. dollar, which influences gold prices, rose slightly by 0.1% on Thursday but remained below recent highs.
Other Metals Show Mixed Moves
Silver futures gained 0.2% to $41.67 per ounce, while platinum futures declined 0.5% to $1,008.20 per ounce. Copper prices were steady to slightly lower, with London Metal Exchange copper futures down 0.2% at $9,987.30 per ton and U.S. copper futures holding at $4.61 per pound.
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