Gold (XAU/USD) trades around $4,620 on Wednesday at the time of writing, down 0.83% on the day.
Bearish pressure on the precious metal strengthens modestly following the release of the Federal Reserve’s (Fed) preferred inflation gauge, although the data do little to alter market expectations for the central bank’s September meeting
The Bureau of Economic Analysis (BEA) reports that the Personal Consumption Expenditures (PCE) Price Index rises 3.7% YoY in July, unchanged from June but slightly above the 3.6% expected by markets. The core PCE Price Index, which excludes volatile food and energy prices, remains steady at 3.3% YoY in July, matching market expectations. On a monthly basis, the PCE Price Index and the core PCE Price Index both rose by 0.2%.
The slightly stronger-than-expected headline reading initially adds some downward pressure on Gold, as persistent inflation could support the case for keeping US interest rates elevated. However, the report does not appear strong enough to significantly reshape expectations for Federal Reserve monetary policy. According to the CME FedWatch Tool, markets continue to price in around a 36% chance of an interest-rate hike at the Fed’s September meeting, leaving roughly a 64% chance that borrowing costs will remain unchanged.