Gold Bounces Back to $4,400 as Rate Hike Expectations Rise

Gold prices recovered on Friday to over $4,400 per ounce after initially falling more than 1% following the release of US inflation data. The Consumer Price Index (CPI) showed a 0.4% increase in August, accelerating from a 0.1% rise in July and marking the fastest pace since May.

The hotter-than-expected inflation data had reinforced expectations for a Federal Reserve rate hike next week, with traders now seeing an 85% probability of a September rate hike, up from 67% before the data.

Despite this, gold rebounded alongside US equities, erasing losses from the previous session. Some traders may have reduced their rate hike bets ahead of the CPI release in anticipation of rebuilding those positions afterwards.