Gold Prices Retreat as Inflation Gauge Surges

Gold prices retreated from a three-month high on Wednesday after a hotter-than-expected US inflation reading. The precious metal's value fell 1% to $4,649.10 an ounce for December delivery, retreating from an overnight high of $4,730.90.

The Comex gold price drop came despite spot gold trading 1.4% lower at $4,592.53, still up about 14% in August and above the 200-day moving average. Silver also declined, with Comex silver for September delivery slipping 1.1% to $67.96 an ounce.

The Fed's preferred inflation gauge came in warmer than expected, with headline PCE rising 3.7% from a year earlier in July, a tenth above forecasts. The core measure held at 3.3%, in line. Consumer spending barely grew as goods purchases dropped, leaving markets weighing sticky inflation against a cooling consumer.

Higher borrowing costs are typically a headwind for non-yielding bullion. Another test comes on Friday when Kevin Warsh delivers his first major speech as chairman at the Jackson Hole symposium, which gives him the chance to counter criticism that he has not been forthright about his views on the economy.