Gold prices near one-month peak on soft dollar, US rate-cut hopes

Gold prices hovered on Friday near their highest point in more than one month, as an overall softer dollar and increased expectations for a U.S. Federal Reserve interest rate cut in September lifted demand for bullion.

FUNDAMENTALS

* Spot gold held its ground at $3,413.80 per ounce, as of 0059 GMT, after hitting its highest point since July 23 on Thursday. Bullion has gained 3.6% so far this month.

* U.S. gold futures for December delivery were flat at $3,473.80.

* The dollar weakened 0.4% overnight, and was set for a monthly drop, making greenback-priced gold less expensive for other currency holders. * Fed Governor Christopher Waller on Thursday stepped up his call for cutting short-term U.S. borrowing costs, saying he would support an interest-rate cut next month and further reductions over the next three to six months.
* Traders are anticipating an 86% chance of a 25-basis-point rate cut at the Fed’s policy meeting next month, according to CME FedWatch Tool.
* Non-yielding gold typically performs well in a low-interest-rate environment.
* Investors are now awaiting the release of the Personal Consumption Expenditures (PCE) Price Index, the preferred inflation measure of the U.S. Fed, due later in the day, for further cues on the Fed’s interest rate trajectory.

* Economists polled by Reuters expect the PCE price index to rise 2.6% in July, matching the climb from the prior month.

* Meanwhile, Fed Governor Lisa Cook filed a lawsuit on Thursday claiming U.S. President Donald Trump has no power to remove her from office, setting up a legal battle that could challenge long-established norms for the U.S. central bank’s independence.

* Elsewhere, spot silver eased 0.1% to $39.02 per ounce, platinum fell 0.2% to $1,356.69 and palladium was steady at $1,102.75.

DATA/EVENTS (GMT)

0645 France GDP QQ Final Q2 0645 France CPI (EU Norm) Prelim MM, YY August

0645 France CPI Prelim MM, YY NSA August 0645 France Producer Prices YY July

0755 Germany Unemployment Chg, Rate SA August 1200 Germany CPI Prelim YY August

1200 Germany HICP Prelim YY August 1230 US Consumption, Adjusted MM July

1230 US Core PCE Price Index MM, YY July 1230 US PCE Price Index MM, YY July

1400 US U Mich Sentiment Final August.