At 1338 GMT, spot gold was down 0.4% at $2,455.91 an ounce, while U.S. gold futures were down 0.5% at $2,494.50.
“A September rate cut is a safe bet; data at this point suggest the Fed is… willpower “Starting at 25 basis points would be a disappointment for the market, which likes to push the limits,” said Tai Wong, an independent metals trader based in New York.
USA consumer price index The CPI rose 0.2% last month, after falling 0.1% in June, the Department of Labor’s Bureau of Labor Statistics reported. In the 12 months through July, the CPI rose 2.9%, after advancing 3% in June.
Markets now see a 41% chance of the Fed cutting rates by 50 basis points in September, compared with 50% before the release of the U.S. CPI data, according to CME’s FedWatch tool. Lower interest rates reduce the likelihood of a 50-basis-point cut. opportunity cost “Expectations have now shifted back to favoring as little as a 25 basis point cut, so that could be taking some of the momentum out of the gold market,” said Phillip Streible, chief market strategist at Blue Line Futures. Atlanta Federal Reserve President Raphael Bostic said Tuesday he wanted to see “a little bit more data” before he was ready to back interest rate cuts.
“We remain in an environment of significantly elevated geopolitical tensions which always benefits gold,” said Ben Hoff, head of commodity strategy at Société Générale.
Non-interest-bearing gold is up 19% so far this year after spot prices hit a record high of $2,483.60 on July 17 on firm safe-haven demand and Fed rate cut expectations.
Elsewhere, spot silver fell 0.2% to $27.77 and platinum was down 0.6% at $930.25. Palladium was down 0.4% at $935.31.
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