Fed support for gold prices – Sözcü

Federal Reserve Chairman Powell’s accommodative remarks reinforced expectations of a rate cut in September, and gold prices remained strong, supported by a weaker dollar and bond yields.

Federal Reserve Chairman Powell said in a speech on Friday, “I believe inflation can sustainably reach 2%,” which supported gold prices hovering above $2,500 an ounce.

The dollar and bond yields also fell ahead of inflation data, which investors expect to pave the way for interest rate cuts in the United States and Europe.

The U.S. will release personal consumption expenditures and core inflation data on Friday, while the European Union will also release leading inflation data. Analysts expect the data to be mild enough to pave the way for a rate cut in September.

A 25 basis point rate cut at the September 18 policy meeting is considered certain, while a 50 basis point cut is 38% likely, according to Fed funding market futures. The market is pricing in 103 basis points of rate cuts this year and 122 basis points in 2025.

Low interest rates make gold a more attractive investment by reducing the appeal of competing interest-bearing assets such as Treasury bonds and the U.S. dollar. Conversely, high interest rates drive investors away from gold.

Therefore, economic data that influences the Fed’s decisions is also closely watched by the gold market.