Gold Gains Slightly, Market Awaits US Inflation Data
Gold prices (XAU/USD) moved positively this morning, approaching the $3,740-$3,750 level in the Asian session, supported by expectations of further interest rate cuts by the Federal Reserve this year and rising geopolitical risks. Market participants' primary focus is now on the release of US PCE inflation data for August, due today.
At its September meeting, the Fed cut its benchmark interest rate by 25 basis points to a range of 4.00%–4.25%. The market now expects two more cuts in the remainder of 2025. Lower interest rates are typically a positive catalyst for gold because they lower the opportunity cost of holding the non-yielding asset.
However, cautious comments from Fed officials, including Chairman Jerome Powell, emphasize that the direction of policy will depend heavily on subsequent economic data. Fed Governor Stephen Miran even voiced support for a more aggressive 0.50% cut, arguing that inflation is already approaching the 2% target if the impact of temporary tariffs is excluded.
With Fed officials sounding cautious, gold's near-term upside remains limited. However, if today's PCE inflation data shows weakness, the opportunity for gold to continue its rally is increasingly open. The market is currently projecting two additional interest rate cuts before the end of the year.
Source: Newsmaker.id
