NEW YORK: Gold prices held their ground on Monday, as investors awaited the US inflation report for further clues on the potential size of the Federal Reserve’s interest-rate cut.
Spot gold was little changed at $2,498.24 per ounce by 11:48 p.m. ET (1548 GMT) and US gold futures were up 0.1% at $2,527.70.
Bullion “will probably be fairly consolidated, perhaps a little bit choppy in the established range in gold,” said Peter A. Grant, vice president and senior metals strategist at Zaner Metals, who expects gold to hit all-time highs.
Bullion hit a record high of $2,531.60 on Aug. 20.
Traders now see a 73% chance of a 25-basis-point cut at the Fed’s meeting next week, and a 27% chance of a 50 bp reduction, according to the CME FedWatch tool.
“The market seems to be reconciling that the Fed is probably more likely to do the smaller 25-basis-point cut and that’s been my position all along,” Grant added.
Lower interest rates reduce the opportunity cost of holding the zero-yield bullion. Last week, a report showed US employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested the labour market was not falling off a cliff to warrant a half-point cut.
Investors will now watch out for August US consumer price data on Wednesday and the producer price index on Thursday.
“If inflation numbers come much lower than expected and raise hopes for a 50-bp cut, then gold could hit all-time highs.
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