Gold Price Hinges on US CPI Inflation Report Ahead of Fed Meeting

The gold price has been struggling to recover from its recent losses, nursing heavy losses after the US Producer Price Index (PPI) data release and the surge in oil prices.

Gold's next major move depends on the upcoming US Consumer Price Index (CPI) inflation report, which is due out soon. The CPI data is a crucial indicator of inflationary pressures and will have a significant impact on the Federal Reserve's decision to raise interest rates or keep them unchanged.

The markets are currently pricing in a 72% chance of a rate hike in September, up from around 60% before the PPI release. The strong US Dollar and rising Treasury bond yields have weighed heavily on gold prices, making it difficult for the metal to gain traction.

However, according to TD Securities, precious metals are effectively 'waiting on inflation data.' An upside surprise in core prints could reinforce the Fed's hawkish expectations, confirming a rate hike next week. This could strengthen the USD and Treasury bond yields, sending gold sharply lower.