Gold Prices on Track to Post Monthly Decline Amid Interest Rate Expectations

Gold prices are on track to post their first monthly decline in three months due to expectations of higher interest rates and a strong US dollar. Spot gold was steady at $4,180.30 per ounce as of 0435 GMT but has lost 6% so far this month.

The dollar's strength is making greenback-denominated metals more expensive for holders of other currencies. The upcoming release of the US personal consumption expenditures price index will be closely watched by investors, which could influence expectations for US monetary policy and the direction of Treasury yields and the dollar.

According to Tony Sage, CEO of Critical Metals, a softer reading in the PCE data would likely support gold and push prices back towards the $4,200-4,300 range. However, a hotter number could lead to higher interest rates and a stronger dollar, putting renewed pressure on gold and testing the $4,100 level.

The Federal Reserve raised interest rates by 25 basis points this month, and traders see a 47% chance of another rate hike in October and a 92% chance of a hike in December, according to the CME's FedWatch Tool. New York Fed President John Williams also stated that policymakers probably only need to deliver one more hike this year to get inflation back on track to the central bank's 2% goal.