Gold slips as dollar, yields gain; PCE data in focus

NEW YORK: Gold fell on Wednesday as the dollar and Treasury yields firmed, but the losses were limited by safe-haven demand amid lingering concerns about the US central bank’s independence after President Donald Trump’s efforts to fire a Fed governor.

Spot gold was down 0.4 percent to USD3,379.76 per ounce at 1018 a.m. ET (14:18 GMT). US gold futures for December delivery eased 0.1 percent to USD3,428.

The dollar index climbed 0.4 percent against a basket of major currencies, making greenback-priced gold more expensive for overseas buyers.

“We’re seeing a stronger US dollar index today and a slight uptick in bond yields... yields are putting selling pressure on the gold and silver markets,” said Jim Wyckoff, senior analyst at Kitco Metals. US Treasury yields edged up 0.4 percent, weighing on non-yielding gold’s appeal.

Trump said earlier this week he was removing Federal Reserve Governor Lisa Cook from her position on the Fed’s board of directors. Meanwhile, Cook’s lawyer said she would file a lawsuit to prevent Trump from firing her, kicking off a potentially protracted legal fight.

Gold prices rose to a more than two-week high on Tuesday, following Trump’s attempt to fire Cook. Investors now await Thursday’s GDP data and Friday’s Personal Consumption Expenditures - the Fed’s preferred inflation gauge - for cues on the interest-rate path. Economists polled by Reuters expect the PCE price index to rise 2.6 percent in July, matching June’s rise.

“If (the PCE data) is a miss showing stronger inflation, that might begin to call into question whether the Fed’s going to be able to cut interest rates in September.

But I suspect it would take an awfully strong inflation number to preempt the Fed from cutting rates in September,” Wyckoff said.

Markets are currently anticipating a more than 90 percent chance of a 25-basis-point rate cut at the Fed’s policy meeting next month, according to CME FedWatch Tool.

Elsewhere, spot silver edged 0.7 percent lower to USD38.31 per ounce, platinum slipped 0.5 percent to USD1,341.83, and palladium dropped 0.6 percent to USD1,087.44.