FX.co ★ Gold Rises on Soft US PCE Inflation Data

Gold climbed toward $4,200 an ounce on Thursday, recouping the previous session’s losses after softer-than-expected US PCE inflation data tempered expectations of a Federal Reserve interest rate hike this month. The US PCE price index rose 0.3% in August, below the 0.4% consensus forecast, while core PCE increased 0.2%, also undershooting expectations for a 0.3% gain. Following the release, markets lowered the implied probability of an October Fed rate hike to about 38%, from 51% beforehand. Oil prices also eased amid indications of improving energy supplies from the Middle East, despite the ongoing stalemate in US-Iran talks. At the same time, US Treasury yields held near multi-decade highs on concerns that persistent, energy-driven inflation could still prompt tighter monetary policy. Traders continue to price in roughly a 97% chance of a Fed rate increase in December.