Gold prices dip as PCE data looms; Set for strong August

Investing.com– Gold prices fell slightly in Asian trade on Friday, but remained close to record highs as markets awaited more cues on interest rates from key U.S. inflation data due later in the day.

But bullion prices were set for strong gains in August, as a mix of safe haven demand and expectations of interest rate cuts put the yellow metal at record highs. 

Spot gold fell 0.3% to $2,514.55 an ounce, while gold futures expiring in December fell 0.5% to $2,547.80 an ounce by 01:08 ET (05:08 GMT). 

Gold set for strong August, PCE data in focus 

Spot prices were set to gain about 2.8% in August, after hitting a record high of $2,531.72 an ounce earlier in the month. 

Tensions in the Middle East spurred safe haven demand for gold, as did a rout in risk-driven markets at the beginning of the month. Signs of steady central bank buying, in emerging markets, also supported prices.

But gold’s biggest point of support was expectations of lower U.S. interest rates, which present a more accommodative environment for investing in the yellow metal.

PCE price index data- the Federal Reserve’s preferred inflation gauge- is due later on Friday and is set to offer more cues on interest rates. 

The PCE data is expected to show inflation remained sticky in July which, coupled with recent signs of resilience in the U.S. economy, could give the Fed less impetus to cut interest rates sharply. The dollar firmed on this notion and was headed for a weekly gain.

But traders are still pricing in an at least 25 basis point cut in September, CME Fedwatch showed. 

Among other precious metals, platinum and silver were mixed on Friday, but were vastly lagging gold through August. 

Copper strong on China stimulus hopes 

Among industrial metals, copper prices advanced on Friday after reports of more stimulus measures in top copper importer China boosted sentiment.

Benchmark copper futures on the London Metal Exchange rose 0.5% to $9,324.50 a ton, while one-month copper futures rose 0.8% to $4.2447 a pound.

Media reports said that Beijing was considering refinancing around $5.4 trillion worth of mortgages- a move that is likely to provide a shot in the arm for China’s beleaguered property market. 

The property market is a major source of Chinese copper demand, with a slowdown in the sector having sparked persistent concerns over slowing Chinese demand for the red metal.