Gold heads for monthly decline, US inflation data looms

Gold held steady on Wednesday but prices remained on track for a monthly loss as expectations of higher interest rates weighed on the market, while investors turned their attention to US inflation data for clues on the Federal Reserve's policy path.

Fundamentals

Spot gold was little changed at $4,178.59 per ounce, as of 0037 GMT, and was down nearly 6% so far this month. US gold futures gained 0.7% to $4,210.30.

The US personal consumption expenditures (PCE) price index is due at 1230 GMT, while the nonfarm payrolls report is scheduled for release on Friday.


Federal Reserve Bank of New York President John Williams said that the US central bank has time to weigh economic data before deciding when to hike interest rates again, adding one more increase is likely before the year ends.

According to CME's FedWatch Tool, traders see a 50% chance of a Fed rate increase in October and a 92% chance of a hike in December.

In a high-interest rate environment, investors often favor yield-bearing assets over gold.

US consumer confidence plunged to a near 12-1/2-year low in September, with households expecting a deterioration in business and labor market conditions over the next six months amid the Middle East conflict and rising rates.

Qatar said it hopes that shuttle diplomacy between Iran and the US can lead to a breakthrough despite US President Donald Trump's denial of media reports that he was willing to ease sanctions and release frozen funds in exchange for Iranian concessions on its nuclear program.

Spot silver fell 0.2% to $61.33, platinum rose 0.5% at $1,713.15 and palladium added 0.5% to $1,228.95. All three metals remained on course for monthly declines.

Data/Events (Gmt)

0130 China NBS Manufacturing PMI Sep

0145 China RatingDog Manufacturing PMI Final Sep

0145 China RatingDog Services PMI Sep

0600 UK GDP QQ, YY Q2

0645 France CPI (EU Norm) Prelim YY, MM Sep

0645 France CPI Prelim YY, MM NSA Sep

0645 France Producer Prices YY Aug

0755 Germany Unemployment Chg, Rate SA Sep

1200 Germany CPI, HICP Prelim YY Sep

1230 US Consumption, Adjusted MM Aug

1230 US Core PCE Price Index MM, YY Aug

1230 US PCE Price Index MM, YY Aug

1230 US GDP Final Q2