Gold prices moved slightly higher on Wednesday but remained on course for a monthly decline as investors awaited U.S. inflation data closely monitored by the Federal Reserve.
At 05:28 ET, spot gold was up 0.1% at $4,187.64 an ounce, while gold futures gained 1.0% to $4,219.30 an ounce.
Despite Wednesday’s gains, spot gold has declined by approximately 6% over the past month.
Attention was focused on the outlook for U.S. inflation and its implications for Federal Reserve monetary policy. Interest-rate expectations are particularly relevant for gold because higher rates can reduce the relative appeal of non-yielding assets.
U.S. Core PCE Inflation Data in Focus
David Morrison, Senior Market Analyst at Trade Nation, said the upcoming inflation figures could influence market expectations.
“[Wednesday] sees the latest update on US Core PCE, the Fed’s preferred inflation measure, which has the potential to shake things up a bit,” Morrison said in a note.
The Federal Reserve increased interest rates by 25 basis points earlier in September as policymakers responded to higher inflationary pressures.
The outlook for further rate increases remains under discussion. New York Federal Reserve President John Williams said this week that there may not be “urgency” to raise rates again immediately in October.
However, 16 of the 18 officials included in the Federal Open Market Committee’s latest set of interest-rate projections indicated at least one additional increase this year.
Core PCE Forecast to Rise 0.3% in August
The personal consumption expenditures price index will provide investors with further information on the direction of U.S. inflation.
Core PCE, which excludes food and energy, is forecast to increase 0.3% month on month in August, compared with a 0.2% rise previously.
Headline PCE is expected to increase 0.4% month on month, accelerating from 0.2%.
On an annual basis, core PCE inflation is projected at 3.3%, while the headline rate is forecast at 3.7%.
Both readings would be unchanged from their respective July rates and would remain above the Federal Reserve’s 2% inflation target.
The figures could influence expectations for the path of U.S. interest rates, which in turn remains an important factor for gold prices.
Qatar Mediates Between U.S. and Iran Over Strait of Hormuz
Investors were also monitoring geopolitical developments in the Middle East and their potential implications for energy prices and inflation.
Qatar is mediating between Washington and Tehran, with discussions focused on a possible agreement that could include reopening the Strait of Hormuz.
Such a development could affect the outlook for global oil supply flows. However, significant differences between the U.S. and Iran remain.
U.S. President Donald Trump has rejected reports that Washington offered Tehran sanctions relief, while Iran has continued to seek conditions linked to reopening the strait.
Elevated Oil Prices Add to Inflation Focus
Signs of improving oil supplies from the Middle East have emerged, but crude prices remain elevated.
Higher energy prices can contribute to broader inflationary pressures, increasing market attention on how central banks may respond through monetary policy.
For gold investors, developments in oil prices, inflation and interest-rate expectations remain interconnected factors as markets assess the outlook for Federal Reserve policy.