By Brijesh Patel
(Reuters) – Gold slipped from a near two-week high on Monday as the dollar crept higher, although increased expectations of interest rate cuts in the U.S. following Federal Reserve Chair Jerome Powell’s dovish pivot last week lent some support to bullion.
Spot gold was down 0.2% at $3,365.83 per ounce, as of 0440 GMT, after hitting its highest since August 11 on Friday.
U.S. gold futures for December delivery eased 0.2% to $3,410.20.
The U.S. dollar index rose 0.2% against its rivals after dropping to a four-week low, making gold less attractive to overseas buyers. [USD/]
“There’s a decent level of support for gold around $3,350 over the near term, with Powell’s dovish hints allowing gold to carve out a prominent swing low on Friday,” City Index senior analyst Matt Simpson said.
“A sustained rally likely requires softer PCE inflation and weaker employment data going forward. But with inflation likely to remain elevated, gold’s gains could remain capped beyond the expected initial bounce.”
Powell on Friday signalled a possible rate cut at the U.S. central bank’s meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn’t set in stone.
Markets are now pricing in an 87% chance of a quarter-point rate cut at the September 17 policy meeting, and a cumulative 48 basis points of reductions by this year-end, according to CME FedWatch Tool.
Gold tends to appreciate in a low-interest-rate environment, which reduces the opportunity cost of holding non-yielding bullion.
Asian share markets rallied on Monday as investors celebrated the likely resumption of rate cuts in the U.S.
Investors now await a reading on U.S. personal consumption prices on Friday that is expected to show core inflation creeping up to its highest since late 2023 at 2.9%.
Elsewhere, spot silver was flat at $38.81 per ounce, platinum fell 0.4% to $1,355.47 and palladium slipped 0.8% to $1,116.82.
(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)
