Gold Prices Slip as Mild Inflation Data Undermines Rate Hike Expectations

Gold prices declined on Friday after reaching a two-month high in the previous session due to mild US inflation data. The non-yielding bullion fell 0.5% to $4,330.37 per ounce as of 0103 GMT, while US gold futures for December delivery slid 0.8% to $4,386.80.

The market's expectations of a September Federal Reserve rate hike were undermined by the release of US producer prices, which remained unchanged in July. The cost of goods fell, and services increased marginally, supporting the notion that interest rates might be kept unchanged next month.

Cleveland Fed President Beth Hammack reiterated her stance on raising rates to restrain growth and combat high inflation. However, this view was countered by the mild consumer inflation data released last month, which bolstered market expectations of a rate hike-free September.