Gold Rebounds as Cooler Inflation Eases Rate Hike Bets

Gold rebounded at the start of October after softer-than-expected US inflation data reduced market expectations for another Federal Reserve interest-rate increase this month, though elevated Treasury yields continued to limit gains. The price movement followed a steep decline in September and unfolded as investors weighed inflation, economic activity and the outlook for monetary policy. The US Bureau of Economic Analysis reported that core personal consumption expenditures (PCE) inflation rose 0.2% in August from July and 3% from a year earlier. Both readings were below expectations, and July inflation figures were revised lower. The PCE index is the Federal Reserve’s preferred inflation measure. On October 1, spot gold was reported near $4,185 an ounce, while December futures were reported above $4,204. These figures refer to different instruments and observations. Gold futures in India also rose on October 1: the October contract on the Multi Commodity Exchange reached ₹150,511 per 10 grams, up ₹1,475, with market analysts attributing the gain to fresh positions and firm spot demand. The inflation report prompted markets to mark down the likelihood of an October rate increase.