Gold inches higher as soft US PPI data fuels rate cut bets; CPI in focus.

US producer prices unexpectedly fell in August due to lower trade services margins and modest increases in goods costs.

Investors are now focused on US Consumer Price Index (CPI) data, with a Reuters poll forecasting a 0.3% monthly increase in August, after a 0.2% rise in July. CPI is expected to have grown 2.9% year-on-year, compared with 2.7% in July.

The Federal Reserve is expected to cut interest rates at its policy meeting next Wednesday, with a quarter-percentage-point reduction fully priced in, while investors anticipate slim possibility of 50-basis-point cut, as per CME FedWatch tool.

Last week’s weaker-than-expected non-farm payrolls report, which pointed to a cooling labour market, further strengthened expectations of monetary easing.

Gold, which does not yield interest, tends to perform well in low-interest-rate environments.

Source: Theedgemalaysia