Gold Prices Soar as US Inflation Data Reduces Rate Hike Expectations

Gold prices have surged Rs 1,400 per gram in two days on the MCX, while silver futures dipped marginally despite softer-than-expected US consumer inflation. The Consumer Price Index rose 3.4% in the 12 months through July, easing from 3.5% in June.

The data reduced expectations of an imminent Federal Reserve rate hike, with markets now pricing in a 40% probability of an interest rate hike at the Fed's September meeting, down from around 54% a week earlier. Expectations of lower interest rates generally support gold by reducing the opportunity cost of holding the non-yielding asset.

Investors are now awaiting producer price data for further clues on the direction of inflation. Spot gold gained 0.6% to $4,433.62 per ounce, while US gold futures for December delivery also climbed 0.6% to $4,493.