$4,600 Gold Target in Sight as CPI Report Clears Path for Rate Hike Hold

Gold prices continued their upward trend after the Consumer Price Index (CPI) report came in line with economists' expectations, sparking hopes for a rate hike hold at the Federal Reserve's next meeting. The CPI increased 0.1% in July from the previous month, while core CPI rose 0.2%. This was seen as a relief for gold, which had been impacted by rate hike fears.

The metal gained $41.20 or 0.93% to close under the resistance level of $4,474, but experts believe it can break through this hurdle and reach its target of $4,600 in futures ($4,500 in spot gold). This prediction is based on a technical analysis that measured the widest point of a short-term descending triangle and projected a line of equal length from the breakout point.

The broader significance of the CPI report lies in its impact on rate hike expectations. The FedWatch tool showed odds favoring a September hike, but after the report, the calculus shifted to favor a hold at the next FOMC meeting for the first time in months. Ellen Zentner, Morgan Stanley's chief economic strategist, noted that the 'no need to hike rates' narrative is now reinforced.