Gold dips as core inflation data reduces likelihood of large Fed cut

Gold prices edged lower following a crucial economic report indicating an unexpected increase in underlying US inflation for August, driven by rising housing costs.

This data diminishes the chances of a significant Federal Reserve interest rate cut next week.

The so-called core consumer price index — which excludes food and energy costs — increased 0.3% from July and 3.2% from a year ago, Bureau of Labor Statistics figures showed Wednesday. Economists see the core gauge as a better indicator of underlying inflation than the overall CPI.

Treasury yields pushed higher while the dollar pared early losses after the print, and bullion whipsawed in response before edging lower. Swap traders now nearly erased bets on a jumbo rate cut by the US central bank this month. Lower rates typically benefit non-interest yielding bullion.

Spot gold was down 0.4% at $2,506.38 an ounce as of 8:49 a.m. in New York, after peaking at a record $2,531.75 in August. The Bloomberg Dollar Spot Index was little changed following three sessions of gains. Silver rose while platinum and palladium declined.

News.Az