Gold prices settled at around $4,200 an ounce on Friday, nearing their highest levels since late October and ending a previous rally, as a series of US data reinforced the likelihood of an interest rate cut soon by the Federal Reserve.
September’s delayed personal consumption expenditures (PCE) price index rose 0.3% month-on-month and 2.8% year-on-year, while the core PCE price index fell to 2.8% from 2.9%, due to steady goods prices and slowing services inflation, indicating easing underlying pressures.
Preliminary survey results for Michigan showed a slight improvement to 53.3 points, with one-year inflation expectations falling to 4.1% and five-year inflation expectations dropping to 3.2%, reinforcing the view that near-term price pressures are easing.
These signals, along with the surprise drop in private sector jobs by 32,000 reported by ADP and Challenger's announcement of 71,321 layoffs, have led markets to price in an approximately 87% probability of a 25-basis-point interest rate cut, prompting adjustments in attitudes that have boosted the price of gold.