Gold prices edged lower on Wednesday, continuing a decline that saw more than a half-percent drop the previous day. The decline follows remarks from several Federal Reserve officials, who indicated that it is still too early to cut interest rates.
Fed Governor Lisa Cook stated that “at some point, it will be appropriate to cut rates,” but emphasized that maintaining the current rates is the correct strategy for now to respond to the economic outlook.
Similarly, Fed Governor Michelle Bowman remarked on Tuesday that it is not yet time to lower interest rates. She noted that inflation data needs to move more sustainably towards the Fed’s 2.0% target before any rate cuts can be considered. Bowman added that baseline estimates indicate inflation is on track to reach the target, provided the Fed keeps its current policy in place for some time.
On Monday, San Francisco Fed President Mary Daly expressed doubt about the need to cut rates before there is greater confidence that inflation is headed towards 2.0%. However, she cautioned against focusing too heavily on inflation at the expense of the labor market, warning that if unemployment continues to rise, the Fed might need to cut rates to support businesses and maintain employment, according to Reuters.
Market-based probabilities of an interest rate cut at or before the Fed’s September meeting have slightly decreased from 67% to 66%, according to the CME FedWatch tool, which calculates chances using Fed Funds futures prices. Such a cut would generally be seen as bullish for gold.
Gold traders will be closely watching the US Personal Consumption Expenditures (PCE) Price Index for May, set to be released on Friday. This index is the Federal Reserve’s preferred measure of inflation. A lower-than-expected result would increase the likelihood of an early rate cut by the Fed, which would support gold prices. Conversely, a rise in inflation would decrease the chances of a rate cut.
Dailygoldprice provides you with live gold prices so that you can always understand the changes in the price of gold and better invest in gold.