Fed Rate Hike Bets Dampened by Softer Inflation Data

Gold prices remained relatively steady at $4,151.12 an ounce on Friday morning in Singapore, following softer inflation data that tempered bets of a rate hike by the Federal Reserve.

The Fed's preferred measure of underlying inflation, the personal consumption expenditure price index excluding food and energy, rose only 0.2% in August, which was less than expected.

This led to a decrease in expectations for a rate hike at the next meeting, with traders now predicting a probability of around 34%, down from almost 70% earlier in the week.

Elevated bond yields and lingering tightening risks, however, left gold vulnerable to further selling, according to Ewa Manthey, commodity strategist at ING Bank. Gold received some support from the softer PCE reading, taking some pressure off expectations for another rate hike, she said.