Gold slips as dollar rises but Fed rate cut expectations support prices

WASHINGTON: Gold prices slipped slightly on Thursday as the US dollar gained strength, but expectations of an interest rate cut by the Federal Reserve in September prevented a sharper decline. 

Spot gold fell 0.3 percent to $3,346.19 per ounce by 0848 GMT, while US gold futures for December delivery dropped 0.4 percent to $3,393.80. The dollar index rose 0.04 percent from a more than two-week low, making gold more expensive for investors using other currencies. 

“Today’s small drop in gold can largely be attributed to a slightly firmer dollar,” said Nitesh Shah, commodities strategist at WisdomTree. He added that signs of a potential Fed rate cut continue to support the metal. 

The chances of a Federal Reserve rate cut in September are now seen as nearly certain. Recent US inflation data for July showed moderate increases, while Treasury Secretary Scott Bessent suggested that a half-point rate cut could be possible given weaker employment numbers. Gold, a non-yielding asset, tends to perform well in a low interest-rate environment. 

Fed rate cut expectations keep gold supported despite dollar gains 

US 10-year Treasury yields remained near a one-week low, adding to the mixed signals for investors. Market participants are closely monitoring upcoming US economic reports, including the Producer Price Index and weekly jobless claims, for clues about the Fed’s next moves. 

“Rate cuts are already largely priced in, but later this year we could see gold rise as concerns about higher US debt levels increase demand for the metal,” Shah noted. 

In other metals markets, spot silver fell 0.6 percent to $38.26 per ounce. Platinum inched up 0.1 percent to $1,341.35, while palladium rose 1 percent to $1,133.40. 

Despite short-term volatility, analysts say gold remains well supported. With central banks around the world keeping monetary policies accommodative and geopolitical tensions simmering, investors continue to view the precious metal as a safe haven. 

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