GLOBAL MARKETS

The US PCE inflation surprised on the downside at 3.4% in August 2026, lower than market expectation of 3.7%. Core PCE also undershot, at 3.0% versus an expected 3.3%. July’s PCE inflation was also revised down to 3.4% (from the earlier 3.7%). The revision could be partly on account of the change in methodology to capture inflation in various services segments portfolio management, legal and software services. The softer inflation prints led market to pare back expectations for an October rate hike from the Fed. The probability has come down to ~38%, pushing the next anticipated hike to December.  Following the release, US dollar index touched an intraday low of 101.05 yesterday but recovered to close at 101.44. Gold edged higher on Thursday after a softer-than-expected US inflation report tempered expectations for a Federal Reserve ‌rate hike this month, with markets looking to upcoming jobs data for further policy signals. Spot gold rose 0.5% to $4,175.19 per ounce by 0417 GMT, starting the month on a positive note after a more than 6% fall in September. US gold futures for December delivery gained 0.4% to $4,204.80. The data reduced expectations of a rate hike in October, with markets pricing in a 38% chance, down from 45% before the release. Traders, however, still see a 97% probability of an increase in December. Higher interest rates reduce the appeal of gold, which does not pay interest. Spot silver rose 1.2% to $61.11, platinum climbed 0.7% to $1,717.35 and palladium firmed 0.3% to $1,207.12.