- Gold prices rose in Asian trading on Thursday and remained close to record highs as traders bet that the yellow metal will benefit from a reduction in federal funds rates.

- However, expectations for a significant rate cut by the Federal Reserve diminished considerably after core Consumer Price Index (CPI) data for August came in higher than anticipated. Traders now expect a modest reduction of 25 basis points later in September, which has strengthened the dollar and limited gold’s advance.

- Spot gold rose by 0.2% to $2,516.88 per ounce, while December gold futures increased by 0.1% to $2,544.55 per ounce.

- Gold stalls below record highs with Fed and Producer Price Index (PPI) data pending. Spot gold was trading near the record high of $2,532.05 per ounce, after approaching this level earlier in the week.

- The yellow metal has benefited from increased safe-haven demand over the past week, especially as risk-driven markets deteriorated due to concerns about a U.S. recession.

- Wednesday’s CPI reading showed that traders significantly scaled back their expectations for a 50 basis point rate cut when the Fed meets next week, with expectations now pointing to a 25 basis point reduction, according to CME Fedwatch.

- Persistent inflation gives the Fed less incentive to sharply cut interest rates.

- Before next week’s meeting, markets will also need to contend with Producer Price Index (PPI) inflation data, due later on Thursday.

- Nonetheless, the prospect of lower rates still presents a positive scenario for gold and precious metals, as it reduces the opportunity cost of investing in non-yielding assets.

- Platinum futures rose by 0.4% to $961.85 per ounce, while silver futures increased by 0.4% to $29.047 per ounce.

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