Dollar Falls as Fed Rate Hike Odds Drop on Soft US Inflation Data

Gold prices have risen after the release of softer-than-expected US inflation data, which has hurt the value of the dollar and raised hopes that the Federal Reserve might not raise interest rates as soon as October.

The Personal Consumption Expenditures Price Index rose 0.3% last month, below a downwardly revised 0.1% gain in July. Core PCE increased 3.0% year-on-year in August after a downwardly revised 3.0% advance in July.

Gold prices extended gains by 0.7% to USD4,209.71 per ounce as of 9:05 a.m. ET (1305 GMT), while US gold futures gained 1.5% to USD4,241.90. The dollar extended losses after the data, making it cheaper for overseas buyers.

According to independent metals trader Tai Wong, 'Core PCE a tenth below consensus, and a lower revision of last month's figure, have boosted gold and may have put a short-term bottom at 4100, which was Monday's low.'