Gold slipped toward $4,150 an ounce on Thursday, erasing gains from the previous session as elevated oil prices and rising Treasury yields outweighed support from weaker-than-expected US inflation data. The US PCE price index rose 0.3% in August, below the 0.4% forecast, while core PCE increased 0.2%, undershooting expectations for a 0.3% advance. On an annual basis, headline PCE inflation registered 3.4%, compared with estimates of 3.7%.
Following the data, markets trimmed expectations for further Federal Reserve tightening, with the implied probability of an October rate hike falling to about 38%, from 51% before the PCE release. However, gold remained under pressure as oil prices stayed high amid limited progress in US–Iran negotiations despite signs of recovering crude flows from the Middle East. At the same time, Treasury yields climbed to multi-decade highs on concerns that sustained energy-driven inflation could force the Fed into a more restrictive policy stance.
