Gold stumbles amid surge in US Treasury yields, rises over 2% monthly

• Gold falls below $2,500 following US PCE report, boosting likelihood of September Fed rate cut.
• Fed’s cautious policy easing strategy stirs uncertainty; markets favor a 25 bps cut.
• Traders’ bets on a 25 bps rate cut rise to 69%; odds for a 50 bps reduction fall to 31%, per CME FedWatch Tool.

Gold prices tumbled over 0.90% on Friday, below the $2,500 figure for the second day in the week after a report from the US Department of Commerce revealed that inflation continues to edge lower, according to July’s core Personal Consumption Expenditures Price Index (PCE). At the time of writing, the XAU/USD trades at $2,497 after hitting a high of $2,526.

Data from the US Bureau of Economic Analysis (BEA) showed that the Federal Reserve’s (Fed) favorite inflation gauge, the core PCE, came slightly below estimates though it matched June’s report. The data supports the Fed’s intentions to begin easing monetary policy as soon as the upcoming September meeting, though uncertainty lies in the size of the first interest rate cut.