Gold prices moved slightly lower on Thursday as investors assessed softer US inflation data alongside elevated Treasury yields and a stronger dollar.
At 04:46 ET (08:46 GMT), spot gold was down 0.1% at $4,152.98 an ounce, while gold futures declined 0.1% to $4,182.67 an ounce.
The US Dollar Index, which measures the currency against a basket of peers, gained 0.3% to 101.79. A stronger dollar can increase the cost of dollar-denominated gold for buyers using other currencies.
Gold Records 6% September Decline
Gold fell 6% during September, its largest monthly decline since June, after the Federal Reserve raised interest rates for the first time since 2023 and indicated that further tightening could remain under consideration.
Global bond yields also increased during the month amid concerns about government debt and fiscal deficits. Higher bond yields can increase the opportunity cost of holding assets such as gold that do not generate interest income.
“Following liquidation brought on by the Iran conflict, higher oil, inflation and yields, which pumped up the USD, gold rallied on renewed investor interest in late summer. However, the September [Federal Open Market Committee] rate hike, expectations of further rate hikes and rising oil prices pushed gold back on the defensive,” HSBC analysts said in a note.
Fed Rate Expectations Shift Following Inflation Data
Gold received some support from reduced expectations for another Federal Reserve interest-rate increase in October.
The personal consumption expenditures price index excluding food and energy, the Fed’s preferred measure of underlying inflation, increased 0.2% in August, below expectations. The previous month’s figure was also revised lower.
Following the data, the implied probability of an interest-rate increase at the Fed’s October meeting fell to around 34%, compared with almost 70% earlier in the week.
US consumer spending, meanwhile, recorded its fastest increase in more than a year during August. Longer-dated Treasury yields remained close to multi-decade highs.
Investors are now awaiting Friday’s US employment report for further information on the Federal Reserve’s interest-rate outlook.