By Sherin Elizabeth Varghese
(Reuters) – Gold hovered near all-time highs on Wednesday, supported by expectations that the Federal Reserve will resume rate cuts at next week’s meeting, following softer-than-expected U.S. inflation data.
Spot gold was up 0.5% at $3,644.49 per ounce, as of 11:06 a.m. EDT (1506 GMT), after hitting a record high of $3,673.95 on Tuesday.
U.S. gold futures for December delivery were up 0.1% at $3,684.10.
U.S. producer prices unexpectedly fell in August, pulled down by a decline in the costs of services, Labor Department data showed.
“Any further weakness in U.S. data should continue to support gold in the view that more than two rate cuts could be on the way before the year is out,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Gold, traditionally seen as a hedge against political and economic uncertainty and inflation, also tends to do well in low-interest rate environments. It has risen more than 38% this year.
Markets are pricing in a 90% probability of a quarter-point cut at the Fed’s September 16-17 meeting, with slim odds on a larger cut, CME’s FedWatch tool showed.
Market confidence in easing was reinforced after last week’s soft nonfarm payrolls report, which pointed to cooling labor market conditions. The Labor Department also revised down job growth estimates through March, suggesting job growth was already slowing before U.S. President Donald Trump’s aggressive tariffs on imports.
Meanwhile, a federal judge on Tuesday temporarily blocked Trump’s attempt to remove Federal Reserve Governor Lisa Cook, an early setback for the White House in a legal fight that threatens the central bank’s independence.
Attention now turns to Thursday’s consumer price index reading, seen as pivotal in shaping the Fed’s policy stance.
“The $3,750 mark is emerging as the next significant resistance, and a consolidation above it could see the precious metal approach $3,900 by year-end,” Ricardo Evangelista, senior analyst at ActivTrades said.
Elsewhere, spot silver added 0.6% to $41.13 per ounce. Platinum gained 1.3% to $1,386.45 and palladium rose 3.1% to $1,182.30.
(Reporting by Sherin Elizabeth Varghese and Ishaan Arora in Bengaluru; Editing by Shailesh Kuber)
