WASHINGTON (dpa-AFX) - Gold prices advanced on Friday, reaching a record high and posting a strong monthly gain after today's soft inflation numbers boosted US Fed rate cut anticipation.
Front Month Comex Gold for September delivery jumped by $41.90 (or 1.22%) to $3,473.70 per troy ounce today. Gold gained $180.50 (or 5.48%) per troy ounce for this month. Gold prices have been up for two consecutive weeks, hitting a record high today.
Front Month Comex Silver for September delivery surged by $1.01 (or 2.58%) to $40.200 per troy ounce today. Silver gained $3.6480 (or 9.98%) per troy ounce for this month. Silver prices have been up for two consecutive weeks and four consecutive months.
In April, US President Donald Trump imposed a baseline tariff of 10% on all US imports and 'reciprocal tariffs' on multiple trading partners. Since April, concerns have remained about the effect of these tariffs on the global economy.
Today, data released by the US Commerce Department revealed that the core PCE price index (excluding volatile and energy prices), which is the US Federal Reserve's preferred yardstick of underlying US inflation, went up 0.3% from the previous month in July and rose by 2.9% year-over-year.
While US personal income rose by 0.4% month-over-month to $25.905 trillion in July, personal/consumer spending increased by 0.5% from June to $20.802 trillion in July.
Similarly, while the PCE price index increased by 0.2% month-over-month in July, prices increased 2.6% on a year-on-year basis in July.
In addition, the data released by the Federal Reserve today revealed that the Central Bank balance sheet in the US decreased to $6,603,384 million in the week ended August 27 from $6,618,415 million in the previous week.
While the Fed's inflation target is 2%, today's data shows that the economy may not be near where the Fed feels comfortable. However, consumer spending and personal income numbers have accelerated, indicating resilience in the economy beyond the 'tariff war' and higher prices.
Markets anticipate a lowering of lending rates by the US Fed when the policymakers convene next month.
According to the CME Group's FedWatch Tool, markets see an 87.2% chance of a 25-basis-point rate cut at the September 17 Fed meeting.
Stakes will be higher for the August jobs and inflation data to be released in early September before the next Fed meeting.
Gold, being a non-yielding asset as well as a dollar-denominated commodity, tends to perform well in a low-interest envronment.
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