Gold falls to near $4,000 as US PCE data reinforces December Fed hike odds
Gold price (XAU/USD) falls to around $4,015 during the early Asian session on Friday. The precious metal loses ground as US inflation data reinforced expectations of a Federal Reserve (Fed) interest rate hike later this year.
Gold prices fell to near $4,000 on Friday as US Personal Consumption Expenditures (PCE) data bolstered expectations of a Federal Reserve rate hike this year. The September PCE Price Index rose 0.5% from August's 0.3% increase, meeting expectations. Inflation concerns continue to drive a negative sentiment towards gold. The Federal Open Market Committee (FOMC) maintained interest rates in a 3.75%-4% range at their October meeting, with Fed Chair Kevin Warsh confirming the central bank has not achieved price stability.
Markets now foresee a 74.9% probability of a US rate hike in December, according to the CME FedWatch tool. Gold is viewed as a safe-haven asset during turbulent times, with central banks holding the most significant gold reserves to support their currencies. High gold reserves can instill trust in a country's solvency. Gold has an inverse correlation with the US Dollar and US Treasuries, meaning that a weaker dollar typically leads to higher gold prices.
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Also reported by 3 other outlets
- Gold prices edge lower as US inflation data reinforces Fed outlook businesstimes.com.sg
- Gold prices edge lower as US inflation data reinforces Fed outlook nst.com.my
- Gold dips to near $4 000 as Fed holds rates with little guidance moneyweb.co.za
