Gold Prices Climb for Third Day as Fed Rate Cut Bets Weigh on Dollar

Gold prices extended their winning streak to a third consecutive session on Thursday, buoyed by growing expectations that the US Federal Reserve will move to cut interest rates in September following softer-than-expected inflation data. The weaker dollar and lower bond yields further supported the precious metal.

Spot gold was up 0.4 per cent at $3,367.53 per ounce as of 0156 GMT, while US gold futures for December delivery gained 0.3 per cent to $3,416.70.

“Markets are pricing in the chance that the Fed cuts 50 basis points in September. So the dollar’s weakening, gold’s going up as a result, yields are also down,” said Kyle Rodda, financial market analyst at Capital.com. “The technical setup of gold looks really constructive. The trend still looks higher. We just basically need to see the market break through the $3,400 level on a sustained basis.”

The dollar hovered near multi-week lows against major currencies, making gold more affordable for overseas buyers. Benchmark US 10-year Treasury yields also stayed close to a one-week low, adding to gold’s appeal.

Rate Cut Bets Strengthen
Data released earlier this week showed US consumer prices rose only modestly in July, bolstering market confidence that the Fed will shift toward monetary easing at its September 17 meeting. Treasury Secretary Scott Bessent said there was a “good chance” the central bank would opt for a half-point cut.

According to LSEG data, traders see a rate cut next month as almost certain, with around a 6 per cent probability of a larger 50 basis point move.

Lower interest rates tend to support non-yielding assets such as gold, which become more attractive compared to interest-bearing investments in a low-rate environment.

Market Focus Turns to US Data
Attention now turns to upcoming US economic indicators due later this week. Investors will be watching the Producer Price Index, weekly jobless claims, and retail sales figures for further signs of economic momentum and clues on the Fed’s policy trajectory.

Gold has rallied in recent weeks amid signs of cooling inflation, with investors betting that the central bank will pivot from its aggressive rate-hiking cycle to support growth. The metal is on track to test the $3,400 level, a move analysts say could pave the way for further gains if sustained.

With the dollar under pressure and bond yields easing, analysts believe market conditions remain favourable for bullion in the near term — particularly if upcoming economic data reinforces expectations of a September rate cut.