Gold hovers near record highs ahead of US inflation data release

Traders expecting a 67% chance of a 25-bps Fed rate cut next month and a 33% chance of a 50-bps cut.

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Gold prices remained near record highs on Friday, poised for a monthly gain amid US rate-cut expectations and geopolitical uncertainty.

Spot gold was up 0.1% at $2,523.59 per ounce, close to the August 20 peak of $2,531.60. It has risen over 3% this month. US gold futures slipped 0.1% to $2,556.70.

In the Middle East, ceasefire talks between Israel and Hamas have yet to show significant progress.

Meanwhile, traders anticipate a 67% chance of a 25-basis-point rate cut by the Federal Reserve next month and a 33% chance of a 50-bps cut, according to CME FedWatch.

Ricardo Evangelista, senior analyst at ActivTrades, forecasts gold prices could approach $3,000 by year-end, driven by a dovish Fed, safe-haven demand, and central bank purchases.

Lower interest rates enhance gold’s appeal as a non-yielding asset.

Investors are awaiting the US Personal Consumption Expenditures (PCE) data at 1230 GMT for clues on future rate changes.

A soft inflation report could lead to lower Treasury yields and a weaker dollar, potentially pushing gold prices to new highs near $2,600.

On the physical market, gold discounts in India widened to a six-week high as higher prices dampened demand, and new Chinese import quotas did not boost purchases.

Spot silver rose 0.3% to $29.53 per ounce, platinum gained 0.2% to $939.36, and palladium increased 0.2% to $982.00, up 6% this month.