Gold Prices Climb on Soft US Inflation Data

The gold price has continued to rise, reaching $4,360 during the early Asian session on Friday. This increase is attributed to the softer US Producer Price Index (PPI) inflation data released earlier in the week.

The US Bureau of Labor Statistics reported that the headline PPI was unchanged month-over-month in July, which was below market expectations of 0.2%. The core PPI rose 0.2% month-over-month in July, also falling short of forecasts for a 0.3% gain.

As a result of these softer inflation numbers, the Federal Reserve's likelihood of raising interest rates next month has decreased. Money markets now price in less than a 40% chance of a September Fed hike, which is likely to support the gold price.

TD Securities analysts suggest that the combination of steady Fed policy and firmer energy markets will help anchor gold prices within an elevated trading band.