Gold prices inch lower as the USD gains from fewer expectations of a 50 basis point Fed rate cut.

Gold price (XAUUSD) struggles to capitalize on the previous day’s advance up from the $2,485 level and falls during the Asian session on Tuesday, despite some follow-through US Dollar (USD) strength. Following the announcement of a mixed monthly jobs report in the United States on Friday, investors reduced their bets on the Federal Reserve (Fed) cutting interest rates further in September. This, in turn, boosts the USD index. (DXY), which monitors the Greenback versus a basket of currencies, has returned to the monthly high reached last week, acting as a headwind for the non-yielding yellow metal.

The XAUUSD fall restricted as traders look to US inflation data for new stimulus.

Aside from that, a generally bullish tone in the equities markets considered as another reason reducing demand for the safe-haven gold price. However, the XAUUSD remains stuck in a multi-week trading range as investors wait for more clues regarding the extent of the Fed rate cut later this month. As a result, the market will remain focused on the release of the latest US consumer inflation data on Wednesday. Meanwhile, the possibility of an imminent start to the Fed’s rate-cutting cycle may discourage traders from placing significant bearish bets on the metal.

Daily Market Movers: Gold pricing weakened by slight USD strength and a bullish risk tone.

Friday’s mixed US employment report lessened the chance of the Federal Reserve cutting interest rates by 50 basis points, benefiting the US Dollar and acting as a drag for gold prices.
According to the CME Group’s FedWatch tool, traders expect a 71% chance of a 25-basis-point rate decrease at the next FOMC meeting on September 17-18, with a 29% chance of a 50-basis-point reduction.
Investors prefer to wait for the release of August US consumer price data on Wednesday, which, combined with the Producer Price Index on Thursday, may affect Fed rate cut predictions.

New York Fed President John Williams emphasized that inflation expectations remain well-anchored.

On Friday, New York Fed President John Williams emphasized that inflation expectations remain well-anchored.
and that monetary policy can be adjusted to a more neutral stance based on evidence.
Separately, Fed Governor Christopher Waller stated that maintaining the economy’s forward momentum indicates it is time to begin lowering rates, and that he is flexible on the amount.
In addition, Chicago Fed President Austan Goolsbee stated that policymakers are finally catching up with the broader market’s opinion that it is time to raise interest rates.
This implies that the path of least resistance for the non-yielding XAUUSD continues to the upward, and the immediate market reaction to stronger US inflation data more likely to be muted.