Aug 28 (Reuters) – Gold prices fell on Wednesday on a stronger U.S. dollar as investors focused on key inflation data from China, the world’s largest economy, for clues as to how much the Federal Reserve will cut interest rates in September.
Spot gold was down 0.8% to $2,505.03 an ounce as of 1:41 p.m. ET (17:41 p.m. GMT), after being down 1.1% early in trading. U.S. gold futures closed 0.6% lower at $2,537.80.
The dollar rose 0.6%, helping to boost the price of gold for holders of other currencies.
“The strong dollar is putting a bit of pressure on us,” said David Meagher, director of metals trading at High Ridge Futures. “At this point we’re waiting for more information to move the market in either direction based on the inflation data.”
“So what we’re seeing here is some profit-taking consolidation ahead of that report.”
Ricardo Evangelista, senior analyst at ActiveTrade, said in a note that a weaker than expected PCE report on Friday could boost expectations of a more dovish Fed, sending gold prices higher.
According to the CME FedWatch tool, the market is pricing in about a 63.5% chance of a 25 basis point U.S. interest rate cut in September, and a 36.5% chance of a 50 basis point cut.
Gold ETFs recorded modest net inflows of 8 tonnes, or $403 million, last week, led by North American funds, according to the World Gold Council.
Meanwhile, China’s net gold imports via Hong Kong rose 17% in July, the first increase since March, data released on Tuesday showed.
China is a major consumer of gold, and rising demand for it could support global gold prices.
Among other precious metals, spot silver fell 2.5% to $29.24 an ounce, platinum fell 2.1% to $933.90 and palladium fell 2.6% to $944.58.
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Reporting by Anushree Mukherjee in Bengaluru; additional reporting by Polina Devitt; Editing by Shreya Biswas
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