Gold Slides to $4,153 as Inflation Softens

Gold Slides to $4,153 as Inflation Softens

Investors pushed spot gold down 0.1% to $4,152.98 an ounce and gold futures down 0.1% to $4,182.67 an ounce as of 04:46 ET (08:46 GMT). The US dollar index rose 0.3% to 101.79, making gold relatively more expensive for foreign buyers. Treasury yields remained near multi‑decade highs, with the 10‑year note yield up 0.72%, adding to the opportunity cost of holding a non‑interest‑bearing asset.

The core driver was softer US inflation data: the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge, increased 0.2% in August, below market expectations and a revision of the prior month’s figure lower. This development sharply cut the implied probability of a Federal Reserve rate hike at the October meeting to roughly 34%, down from almost 70% earlier in the week.

Despite the softer inflation, US consumer spending in August rose at its fastest pace in more than a year, reinforcing expectations that the economy can tolerate higher rates. The stronger economic backdrop helped keep longer‑dated Treasury yields elevated.

Gold’s price weakness extended through September, with the metal falling 6% for the month – its steepest decline since June – after the Fed raised rates for the first time since 2023 and signaled that additional tightening could still be required. Global bond yields also climbed during the month as concerns over rising government debt and fiscal deficits lifted term premiums, further pressuring gold.

HSBC analysts noted that earlier in the summer, higher oil prices, inflation, and yields following the Iran‑related liquidation had boosted gold, but the September Fed rate hike and expectations of further hikes, together with rising oil prices, pushed the metal back onto the defensive.

Markets now look ahead to Friday’s US jobs report for additional clues on the Fed’s policy trajectory and the broader outlook for bullion.