Gold Set to Post Monthly Gain as Investors Await Key Inflation Gauge

Gold Set to Post Monthly Gain as Investors Await Key Inflation Gauge

New York — Gold prices are on track for a modest monthly gain, with markets turning their focus to the Federal Reserve’s preferred inflation measure — the personal consumption expenditures (PCE) index — due out this week. The data could shape expectations for the Fed’s next moves on interest rates and, by extension, determine whether gold’s momentum continues.

Gold Finds Steady Ground

After weeks of choppy trading, gold has gained about 2% this month, supported by a weaker U.S. dollar and signs that central banks — particularly in emerging markets — are adding to their gold reserves. At around $2,390 per ounce, the metal remains just below its all-time highs set earlier this year.

For investors, gold continues to play its traditional role as a hedge against uncertainty. Concerns over slowing global growth, geopolitical instability, and trade disputes have kept demand steady, even as U.S. equities remain relatively strong.

Spotlight on the PCE Index

The upcoming PCE report is expected to show inflation cooling but not dramatically. Economists project annual core inflation — which strips out food and energy — to hover around 2.8%. That would signal progress toward the Fed’s 2% target but leave policymakers little room to declare victory.

“If PCE confirms a gradual decline in inflation, gold could see further gains as investors anticipate the Fed holding steady or even cutting rates later this year,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “But if the data surprises to the upside, we could see a pullback as rate-cut bets get pushed further out.”

A Centrist View: Balancing Risks and Realities

From a centrist perspective, the gold market reflects both optimism and caution. On one hand, steady consumer spending and resilient corporate earnings suggest the economy is still on solid footing. On the other, persistent inflation risks and uncertainty about global growth keep safe-haven demand for gold alive.

Neither the bullish nor bearish case is fully convincing. The Fed’s path forward will likely hinge on incremental data — not sweeping shifts — which means gold could continue to trade in a relatively narrow range unless a shock jolts the markets.

What’s Next

All eyes are now on the Fed’s September meeting. If policymakers strike a dovish tone, gold could move higher as bond yields fall. But stronger-than-expected inflation could trigger the opposite reaction, leaving gold vulnerable to profit-taking.

For now, gold’s resilience underscores a broader reality: even as equities climb and the U.S. economy shows resilience, investors are still willing to pay for insurance against the unknown.