Gold flat after data suggests smaller Fed rate cut

GOLD prices were flat on Monday (Sep 2), after falling 1 per cent in the previous session, with US inflation data suggested that the Federal Reserve was more likely to go for a smaller-than-expected interest rate cut this month.

Spot gold was flat at US$2,502.89 per ounce, as at 0015 GMT after hitting a session low of US$2,494.15 on Friday. However, bullion registered a monthly gain in August.

US gold futures rose 0.3 per cent to US$2,535.00.

Data on Friday showed that US consumer spending increased solidly in July, arguing against a half-percentage-point interest rate cut from the Fed this month. The personal consumption expenditures price index rose 0.2 per cent last month, in line with expectations, after an unrevised 0.1 per cent advance in June.

Non-yielding bullion tends to thrive in a low-interest-rate environment.

The Fed is expected to kick off a rate-cutting cycle at its monetary policy meeting on Sep 17 to 18. Traders currently see a 67 per cent chance of a 25 basis-point (bp) reduction by the US central bank this month and a 33 per cent chance of a 50-bp cut, according to the CME FedWatch tool.

Investors now look ahead to the ADP employment data and US non-farm payroll report due later this week.

On the geopolitical front, protests gripped Israel following the death of six hostages in Gaza as frustration mounted with the country’s leadership for failing to secure a ceasefire deal.

Spot silver edged 0.2 per cent higher to US$28.89 per ounce, platinum nearly steady at US$926.80 and palladium rose 0.3 per cent to US$968.18.

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South Africa’s platinum mining industry has entered a phase of irreversible decline as producers struggle with low prices and demand suffers from the rise of battery electric vehicles, Northam Platinum CEO Paul Dunne said on Friday. REUTERS