Gold moves in a positive zone before US expenditures report

Gold prices rose in the European market on Friday, extending gains for a second straight day and trading near all-time highs, on track for a sixth consecutive weekly advance, supported by the US dollar’s pause against a basket of major currencies.

With Federal Reserve officials striking a more cautious tone and strong US economic data released, the probability of an October rate cut has declined.

To reprice those expectations, investors later today await the US Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge.

Price Overview

• Gold prices rose by about 0.2% to $3,755.24, from an opening level of $3,749.39, after touching a low of $3,734.58.

• On Thursday, gold settled up 0.35%, resuming gains after a pause the previous day on profit-taking and corrections from the all-time high of $3,791.13 an ounce.

Weekly Trading

Over the course of this week, which officially ends at today’s settlement, gold prices are up about 1.9%, on track for a sixth straight weekly gain, the longest winning streak since late December 2024.

US Dollar

The dollar index fell about 0.1% on Friday, retreating from a three-week high of 98.61 points, reflecting a pause in the US currency’s advance against a basket of global peers.

Beyond profit-taking, the US dollar has retreated in a narrow range as investors avoided building new long positions ahead of the release of the monthly PCE report.

US Interest Rates

• Fed Chair Jerome Powell said on Tuesday that the central bank will continue to balance concerns about a weakening labor market with mounting worries over inflation.

• Data on Thursday showed that the US economy grew in the second quarter at its fastest pace in more than two years, beating market expectations, while jobless claims fell sharply last week.

• Following the comments and data, and according to the CME FedWatch tool, the probability of a 25-basis-point rate cut in October fell from 92% to 88%, while the probability of holding rates steady rose from 8% to 12%.

• To reprice those expectations, investors later today await the August PCE report, heavily relied on by the Fed to gauge inflation trends.

Gold Outlook

Tim Waterer, chief market analyst at KCM Trade, said that the dollar’s normalization represents a potential barrier for gold and its bid to reach $3,800.

He added that US President Donald Trump’s recent announcement of new tariffs may limit any immediate downside for gold prices.

Waterer also explained that gold is trading somewhat sluggishly, with traders hesitant to buy the precious metal with real conviction, fearing that the core PCE report, even slightly, could mirror the rise in GDP readings.

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Thursday, with the total standing at 996.85 metric tons.