Gold flat after data suggests smaller Fed rate cut

Gold prices were flat on Monday, after falling 1% in the previous session, with U.S. inflation data suggested that the Federal Reserve was more likely to go for a smaller-than-expected interest rate cut this month.

FUNDAMENTALS

* Spot gold was flat at $2,502.89 per ounce, as of 0015 GMT after hitting a session low of $2,494.15 on Friday. However, bullion registered a monthly gain in August.

* U.S. gold futures rose 0.3% to $2,535.00.

* Data on Friday showed that U.S. consumer spending increased solidly in July, arguing against a half-percentage-point interest rate cut from the Fed this month. The personal consumption expenditures (PCE) price index rose 0.2% last month, in line with expectations, after an unrevised 0.1% advance in June.

* Non-yielding bullion tends to thrive in a low-interest-rate environment.

* The Fed is expected to kick off a rate-cutting cycle at its monetary policy meeting on Sept. 17-18. Traders currently see a 67% chance of a 25 basis-point (bp) reduction by the U.S central bank this month and a 33% chance of a 50-bp cut, according to the CME FedWatch tool.
* Investors now look ahead to the ADP employment data and U.S. non-farm payroll report due later this week.
* On the geopolitical front, protests gripped Israel following the death of six hostages in Gaza as frustration mounted with the country’s leadership for failing to secure a ceasefire deal.

* Spot silver edged 0.2% higher to $28.89 per ounce, platinum nearly steady at $926.80 and palladium rose 0.3% to $968.18.

* South Africa’s platinum mining industry has entered a phase of irreversible decline as producers struggle with low prices and demand suffers from the rise of battery electric vehicles, Northam Platinum CEO Paul Dunne said on Friday.

DATA/EVENTS (GMT)

0130 Japan JibunBK Mfg PMI Final August

0145 China Caixin Mfg PMI Final August

0750 France HCOB Manufacturing PMI August

0755 Germany HCOB Mfg PMI August

0800 EU HCOB Mfg Final PMI August

0830 UK S&P Global Manufacturing PMI August.