Gold Price Surge Fizzles as Traders Await Inflation Cues

Gold prices touched their highest level in over two months before slipping on Thursday as traders paused to wait for inflation cues from upcoming data. Spot gold fell 0.5% to $4,383.53 per ounce by 0601 GMT after jumping about 1% to its highest since June 5.

The rally was fueled by cooling US inflation, with the consumer price index rising 3.4% in the 12 months through July, down from 3.5% in June. However, traders are now pricing in only a 40% chance of a Fed rate hike at the September meeting, down from about 54% seen a week before.

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, said Tim Waterer, chief market analyst at KCM Trade. Traders appear content to wait for confirmation from the upcoming PPI data before committing to the next leg higher.