Gold Dips Below $4,600 as US Inflation Data Reaffirms Rate Hike Possibility

The price of gold (XAU/USD) dipped below $4,600 on Friday during Asian trading hours, retreating from its three-month high. This decline comes as US inflation data for July was in line with market expectations, reinforcing the possibility of further Federal Reserve rate hikes.

The core Personal Consumption Expenditures (PCE) Price Index inflation held steady at 3.3% YoY in July, according to the US Bureau of Economic Analysis. This figure came in line with market forecasts, leading to an increase in bets on a September rate hike from the Fed.

Gold's price is often influenced by interest rates, as it does not yield interest and becomes less attractive when rates are high. However, optimism for a reopening of the Strait of Hormuz amid diplomatic efforts involving Iran and Oman may ease oil-driven inflation concerns and cap the downside for gold.