Gold Remains Under Pressure

Gold slipped toward $4,150 an ounce on Thursday after surrendering gains from the previous session, as elevated oil prices and Treasury yields outweighed support from softer-than-expected US inflation data. The US PCE price index rose 0.3% in August, below the 0.4% forecast, while core PCE increased 0.2%, also falling short of expectations for a 0.3% gain. On an annual basis, headline PCE inflation came in at 3.4%, below the expected 3.7%. Markets now see roughly a 38% chance of a Federal Reserve rate hike in October, down from 51% before the PCE release. Meanwhile, oil prices remain elevated as the US and Iran make little progress in negotiations despite signs of recovering Middle East flows. Treasury yields also climbed to multi-decade highs amid concerns over persistent energy-driven inflation, which could prompt tighter monetary policy.

Gold rose to around $4,200 an ounce Wednesday, as softer-than-expected US inflation data eased expectations of another Federal Reserve rate hike as soon as next month. The PCE price index rose 0.3% in August, below expectations of 0.4%, while core PCE increased 0.2%, also below forecasts of 0.3%. Annually, headline PCE inflation stood at 3.4%, below expectations of 3.7%. Markets are now pricing in a below 40% chance of a 25 bps rate hike in October, down sharply from 70% last Friday. New York Fed President John Williams also said the Fed does not need to rush into another rate increase following this month’s hike, further supporting gold. However, precious metals remained under pressure from elevated Treasury yields, with both 10-year and 30-year US Treasury yields at multi-year highs. Gold fell nearly 6% in September, pressured by persistent energy-driven inflation and hawkish comments from Fed officials that strengthened expectations for further policy tightening later this year.

Gold rose to around $4,200 an ounce on Wednesday, extending gains from the previous session, with falling oil prices offering some support despite continued pressure from elevated Treasury yields. Oil prices dropped sharply amid signs of improving energy flows from the Middle East and following another major release of emergency reserves in the US. Meanwhile, precious metals remain under pressure from rising Treasury yields, with the 30-year US bond yield climbing as high as 5.62%, reaching levels not seen since June 2002. Concerns over persistent energy-driven inflation, along with hawkish remarks from Federal Reserve officials, helped push yields higher. New York Fed President John Williams said Tuesday that another rate increase “late this year” could be appropriate, while noting that the Middle East conflict and the expansion of artificial intelligence remain key drivers of elevated inflation. Gold is on track to decline nearly 6% in September.