Gold Price Retreats to $4,400 as Inflation Data Reduces Fed Hike Bets
The gold price has retreated to around $4,400 after reaching fresh ten-week highs earlier in the session at $4,450. The move was fueled by mild US Consumer Price Index (CPI) readings, which reduced bets for a US Federal Reserve (Fed) interest rate hike in September.
According to TD Securities, the latest inflation data should continue to bring relief to the Fed regarding the need for tighter policy. The bank points to signs of normalization in services prices along with tariff pass-through that remains under control as developments that 'bode well for concerns around sticky core inflation.'
The benign inflation readings have triggered a big sell-off in the US Dollar (USD) alongside US Treasury bond yields, bolstering the ongoing gold price uptrend. However, traders are now pricing in only a 40% probability of an interest rate hike at the September meeting, down from about 54% seen a week before.
Gold traders will also closely monitor developments in the Middle East, which could fuel a brief corrective downside for the metal before dip-buying emerges amid a bullish daily technical setup. The metal holds a bullish near-term bias as it stands above the short- and medium-term simple moving averages (SMAs), with the 21-day SMA at $4,151.01 and the 50-day SMA at $4,146.69 underpinning the advance.