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Gold slips after US PCE inflation prints firm the dollar

XAU/USD is around $4,618 after Tuesday’s peak near $4,697, as the market prices about a 65% chance the Fed holds rates steady in September.

Reported · Written up by our desk · Major Pairs

Gold (XAU/USD) stayed under pressure on Wednesday after the latest US PCE inflation data helped support the US dollar, reducing appetite for the non-yielding metal. At the time of writing, the pair traded near $4,618, after rising to about $4,697 on Tuesday, its highest level since May 14, according to FXStreet.

The headline PCE Price Index increased 0.2% month over month in July, above the 0.1% forecast, and annual headline inflation held steady at 3.7%, compared with an expected 3.6%. Core PCE, the Fed’s preferred underlying measure, also rose 0.2% month over month and kept annual core inflation at 3.3%, in line with forecasts.

FXStreet said the data did not meaningfully change expectations for the Fed’s upcoming meeting, with the CME FedWatch Tool pointing to roughly a 65% chance the central bank will leave interest rates unchanged in September. The firmer dollar, with the US Dollar Index around 99.20 up about 0.29% on the day, weighed on dollar-denominated gold.

Beyond rates, FXStreet noted the US Treasury’s decision to increase buybacks of longer-dated government securities has revived concerns about rising US debt and fiscal credibility. On the geopolitics side, it also cited comments from Iran that the Strait of Hormuz remains closed until US commitments under an MOU are met, while WTI oil fell for a third straight day to around $80 per barrel.

Latest closeGold $4,432.00 ▲1.6%|WTI crude $82.40 ▲1.4%|Dollar index 99.64 ▼0.3%

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