Gold prices set for weekly drop as traders scale back Fed cut bets

Investing.com-- Gold prices edged higher in Asian trade on Friday, but headed for weekly losses dragged by reduced hopes for an outsized Federal Reserve rate cut next month, while investors looked ahead to U.S.-Russia talks starting later in the day.

Spot gold edged 0.3% higher to $3,344.88 an ounce, while Gold Futures for December gained 0.2% to $3,391.17/oz by 01:41 ET (05:41 GMT).

Gold prices were poised to lose 1.5% this week, mainly due to a sharp decline at the start of the week, when President Donald Trump said gold bars would not face tariffs.

Strong US PPI reduced bets for outsized Fed cut

Gold prices fell 0.6% on Thursday after the U.S. producer price index for July came in hotter-than-expected and dampened expectations of a large Federal Reserve rate cut next month.

Mild consumer inflation data released earlier this week had strengthened the case for the Fed to cut rates at its September meeting.

Markets still view a September rate cut as the most likely outcome, but the chances of a quarter-point move slipped from near certainty after the PPI data, while expectations for a half-point cut diminished.

Higher-for-longer rates put downward pressure on bullion prices as they make interest-bearing assets more attractive.

Trump-Putin meet ahead

Focus for the day was squarely on Friday’s summit between Trump and Russian President Vladimir Putin in Anchorage, Alaska.

U.S. President Donald Trump has warned of “severe consequences” for Russia if Vladimir Putin blocks progress toward peace in Ukraine.

A constructive outcome could reduce demand for gold as a safe-haven asset, although any signs of failed negotiations or heightened tensions could boost bullion prices.

Other precious metals were also subdued on Friday, with Platinum Futures edging up 0.2% to $1,367.20/oz. Silver Futures were largely unchanged at $38.073/oz.

Benchmark Copper Futures on the London Metal Exchange were largely unchanged at $9,793.05 a ton, while U.S. Copper Futures also traded flat at $4.50 a pound.