Gold futures edge higher on U.S. interest rate cut optimism as Bessent weighs in

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Gold futures posted modest gains Wednesday on heightened expectations of a Federal Reserve interest rate cut after mild July inflation data signaled limited pass-through from President Trump's tariffs.

Tuesday's headline Consumer Price Index inflation data for July rose 2.7% Y/Y, lower than consensus estimates, following weak jobs data earlier this month, which has reinforced bets on at least one cut, with markets now pricing in a 97% chance of a September cut [https://www.reuters.com/world/china/gold-gains-weak-dollar-investors-ramp-up-fed-rate-cut-bets-2025-08-13/].

Treasury Secretary Bessent made his most explicit call yet for the Fed to execute a cycle of rate cuts, suggesting on Wednesday that the central bank’s benchmark ought to be at least 1.5 percentage points lower than current levels, adding to the mounting speculation that Fed will make a move next month.

The dollar index reached its lowest in more than two weeks, making bullion cheaper for overseas buyers, while the yield on the benchmark 10-year Treasury note edged lower.

"With stagflation risks and a rate cutting puppet hitting the Fed chair sooner or later, the trajectory is higher" for gold, Saxo Bank head of commodity strategy Ole Hansen said in a note.

However, trade concerns have eased after the extension of the U.S.-China tariff truce and geopolitical tensions have cooled ahead of the summit between Presidents Trump and Putin, limiting gold's gains on safe-haven appeal.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for August delivery closed +0.3% to $3,358.70/oz, snapping a two-day losing streak, and front-month August Comex silver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) ended +1.6% to $38.499/oz, silver highest settlement value since July 24.

ETFs: (NYSEARCA:GLD [https://seekingalpha.com/symbol/GLD]), (NYSEARCA:GDX [https://seekingalpha.com/symbol/GDX]), (GDXJ [https://seekingalpha.com/symbol/GDXJ]), (NYSEARCA:IAU [https://seekingalpha.com/symbol/IAU]), (NYSEARCA:NUGT [https://seekingalpha.com/symbol/NUGT]), (PHYS [https://seekingalpha.com/symbol/PHYS]), (GLDM [https://seekingalpha.com/symbol/GLDM]), (AAAU [https://seekingalpha.com/symbol/AAAU]), (SGOL [https://seekingalpha.com/symbol/SGOL]), (RING [https://seekingalpha.com/symbol/RING]), (BAR [https://seekingalpha.com/symbol/BAR]), (OUNZ [https://seekingalpha.com/symbol/OUNZ]), (SLV [https://seekingalpha.com/symbol/SLV]), (PSLV [https://seekingalpha.com/symbol/PSLV]), (SIVR [https://seekingalpha.com/symbol/SIVR]), (SIL [https://seekingalpha.com/symbol/SIL]), (SILJ [https://seekingalpha.com/symbol/SILJ])

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