Gold Closes Roughly Flat As PPI Data Cements Expectations Of Fed Rate Cut

(RTTNews) - Gold prices settled roughly flat on Wednesday as producer prices registered a surprising dip, the first in four months, fortifying expectations of an interest rate cut this month.

Front Month Comex Gold for September delivery crept up by 30.00 cents (or 0.01%) to $3,643.60 per troy ounce today. With the slight increase, gold still reached a new record closing high. Notably, gold prices have gained around 38% so far this year.

Front Month Comex Silver for September delivery climbed 25.50 cents (or 0.62%) to $41.133 per troy ounce today. Today's settlement value is the third highest for Silver this year.

Data released today by the US Labor Department revealed that month-on-month producer prices in the US unexpectedly fell 0.1% in August following a downwardly revised 0.7% increase in July.

Month-on-month core producer prices, which exclude food and energy, fell by 0.1% in August, from the previous month.

Year-on-year, producer price inflation slowed to 2.6% in August from a downwardly revised 3.1% in July.

Year-on-year, core producer price inflation fell to 2.8% in August from a downwardly revised 3.4% in the prior month.

A clearer picture on the state of US economy will be known when consumer price inflation report is released tomorrow.

According to CME Group's FedWatch Tool, investors are betting on a 90.0 chance of a 25-point interest rate cut, with the likelihood of a larger 50-basis-point rate cut at 10.0%.

Trading partners of the US are faced with fresh uncertainty. The "reciprocal tariff" imposed by the US on various nations were deemed "illegal" by an appeals court on August 29.

Shocked by this setback, the US administration is battling against the verdict in the US Supreme Court. With the case placed on the fast track and oral arguments to begin in the first week of November, a final judgment delivery may drag on for many more weeks.

In Europe, last night and this morning, Polish forces shot down Russian drones that entered their air space, sparking speculation of NATO forces entering the Russia-Ukraine war.

A cooling labor market, geopolitical tensions, a weakening US dollar, tariff confusion, and increasing inflation are primarily contributing to the precious metal's rally.