Gold prices (XAU/USD) rebounded during Thursday’s North American session, gaining 0.67% to trade at $2,624 after hitting a daily low of $2,603. The recovery came in response to mixed US economic data, with a hotter-than-expected inflation report tempered by weaker labor market figures. However, hawkish remarks from a Federal Reserve official limited the precious metal’s advance.
August inflation in the US exceeded forecasts, but this was offset by a rise in unemployment claims. The US Department of Labor reported that more individuals applied for unemployment benefits than anticipated, potentially signaling a slowdown in the labor market. This development could prompt the Fed to consider more aggressive interest rate cuts to stimulate the economy.
Following the data release, the swaps market increased its expectations for a 25 basis point (bps) rate cut at the Fed’s November meeting.
Fed Officials Signal Potential Rate Cuts
In addition to the economic reports, several Fed officials made key remarks on monetary policy. Chicago Fed President Austan Goolsbee indicated he expects gradual rate cuts over the next year and a half, as inflation nears the Fed’s 2% target. Similarly, New York Fed President John Williams, speaking in Binghamton, New York, echoed expectations for further rate cuts. He emphasized that future adjustments to interest rates would depend on incoming data and the evolving economic outlook.
However, Atlanta Fed President Raphael Bostic struck a more cautious tone, suggesting he is open to skipping a rate cut in November, as reported by The Wall Street Journal. Bostic’s comments reflect ongoing debate within the Fed about the timing and magnitude of future policy changes.
Upcoming Data in Focus
Gold traders are now turning their attention to Friday’s release of the Producer Price Index (PPI) and the University of Michigan Consumer Sentiment survey, both of which could provide additional insights into inflation trends and economic confidence. These reports are likely to influence market sentiment and the Fed’s policy outlook moving forward.
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