Markets are said to give the prospect of another rate cut a 77% chance by the end of October – something that supports gold extending its price run above $1,500 an ounce. The news comes as the latest data confirms inflation pressure has dropped fairly shortly. The Producer Price Index or PPI, released yesterday (Tuesday) by the US Labour Department showed a 0.3% fall in September, instead of the expected 0.2% increase forecast by economists.
While gold prices climbed immediately upon release of the data, the interesting thing to note is that this gives the Federal Reserve much more ammunition to make further rate cuts, an action that is highly likely to provoke gold price gains right away. If you haven’t yet purchased gold or have been mulling over increasing your investment in the precious metal, this is a great indicator to do so now.