Gold Pauses After US Inflation Eases, Traders Eye PPI Data
Gold prices have steadied near their highest level in over two months after a rally driven by cooling US inflation. The Consumer Price Index rose 3.4% in the 12 months through July, down from 3.5% in June, according to the Bureau of Labour Statistics.
Traders are now pricing in only a 40% chance of an interest rate hike at the Fed's September meeting, down from about 54% seen a week before, according to the CME FedWatch Tool. Expectations of lower rates tend to support gold by lowering the opportunity cost of holding the non-yielding asset.
Market analyst Tim Waterer said 'gold is in consolidation mode today after its post-CPI gains, with near-term expectations of a Fed rate hike being dialled back another notch.' Traders are waiting for confirmation from the upcoming Producer Price Index (PPI) data before committing to the next leg higher.
Meanwhile, silver prices have gained about 0.3% to $65.47 per ounce, while platinum and palladium have lost value.