(Bloomberg) — Gold advanced as a surprise pullback in US inflation underpinned bets that the Federal Reserve will lower interest rates at its meeting next week.
US wholesale inflation unexpectedly declined in August for the first time in four months, alleviating worries that elevated inflation would create a challenge for Fed policymakers trying to prevent a slowdown in the labor market. Traders now almost fully priced in three rate cuts for the rest of the year. Bullion typically benefits in a low rate environment.
Investors will be watching consumer price data due Thursday, which is expected to show another elevated monthly advance in the core measure that excludes food and energy.
“Rising risks to the labor market will likely prompt the Fed to maintain its easing stance through to March 2026,” ANZ Group Holdings Ltd. analysts Soni Kumari and Daniel Hynes wrote in a note, raising the bank’s year-end gold forecast by $200 to $3,800.
“We expect continued growth in gold holdings across major markets, including China and India. We project an additional 200 tons of ETF investment for the remainder of 2025,” the ANZ analysts said.
Bullion has rallied by almost 40% this year on central-bank buying, geopolitical uncertainties, and concerns about the impacts of US tariffs on the global economy. Inflows into gold-backed exchange-traded funds have provided additional support, with many banks including Goldman Sachs Group Inc. predicting further gains in prices as the Fed is expected to cut interest rates.
President Donald Trump’s bid to extend his influence over the Fed, challenging its independence, has also aided gold. A judge temporarily blocked the president from removing Governor Lisa Cook, allowing her to remain on the job as she challenges the Trump’s efforts to oust her over allegations of mortgage fraud. The decision means Cook can likely attend next week’s FOMC.
Several central banks have signaled their sustained appetite for bullion in recent days, pointing to continued official-sector purchases. This week, the Czech authorities said its gold holdings were at a record, after data showed a rise at the People’s Bank of China. India’s central bank has also increased buying.
Gold was 0.4% higher at $3,642.10 an ounce at 11:27 a.m. in New York. The Bloomberg Dollar Spot Index edged lower. Silver rose above $41 an ounce, and platinum also gained.
Palladium rallied as much as 4.7% after reports that Trump floated new tariffs on China and India, in a bid to squeeze Russia on the condition that EU nations do so as well. Russia is the largest supplier of palladium.
–With assistance from Mark Burton.
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