Gold prices increased approximately 1% on Friday and were on track for their strongest monthly performance since April, as U.S. inflation data bolstered expectations that the Federal Reserve may lower interest rates in the upcoming month. Spot gold experienced an increase of 0.8%, reaching $3,443.19 per ounce as of 1:53 p.m. ET (1753 GMT), marking its highest level since July 17. Bullion experienced an increase of 4.7% in August.
U.S. gold futures for December delivery concluded the session with a 1.2% increase, reaching a price of $3,516.1. The dollar maintained its position, yet it was poised for a monthly decline of 2.2%. A depreciated dollar renders gold more affordable for international purchasers. In July, there was a notable increase in U.S. consumer spending, accompanied by a rise in underlying inflation, attributed to tariffs on imports that elevated the prices of certain goods. The U.S. Personal Consumption Expenditures Price index increased by 0.2% on a month-on-month basis and registered a 2.6% rise year-on-year, aligning with anticipated outcomes.
“We have expectations of a Fed rate cut, or potentially two, throughout this year, which is generally supportive for commodity prices across the board, including gold and silver,” stated David Meger, director of metals trading at High Ridge Futures. Traders have raised their expectations for a 25-basis-point rate cut by the U.S. central bank at the September policy meeting, now estimating a probability of nearly 89%, an increase from 85% prior to the data release. Gold, which does not yield interest, generally exhibits strong performance in an environment characterized by low interest rates.
On Friday, a federal judge is set to deliberate on the potential temporary injunction against President Donald Trump regarding the dismissal of Federal Reserve Governor Lisa Cook, who is currently engaged in legal action asserting that Trump lacks a legitimate basis for her removal. Gold is experiencing positive momentum due to the prevailing uncertainty regarding Fed independence, evidenced by inflows into gold ETFs totaling just under 15 tons over the past two days.
Nonetheless, the potential for gold to exceed $3,400 appears to be increasingly constrained,” Commerzbank stated in a note. Spot silver increased by 1.7% to $39.77 per ounce, while platinum rose by 0.3% to $1,362.86, with both metals poised for monthly gains. Palladium remained unchanged at $1,102.08, poised for a monthly decline.