Gold Prices Soar to Two-Month Highs on Cooling Inflation Expectations

Gold prices reached two-month highs on Wednesday as a lower-than-expected July Consumer Price Index (CPI) report trimmed expectations for a September Federal Reserve rate hike and eased Treasury yields. Spot gold was trading near $4,406.20 an ounce, up 0.90%, while spot silver was trading at $65.140, up 0.89%.

The CPI report showed headline inflation rose 0.1% in July and 3.4% from a year earlier, while core inflation increased 0.2% on the month and 2.5% year-over-year. As a result, September hike odds fell to around 40% from roughly 48% on Tuesday.

The Strait of Hormuz remains a key geopolitical risk factor for oil prices and inflation expectations, with Iran's top security official tying the strait's reopening to US conditions including frozen assets and regional conflicts. The International Energy Agency warned that available inventory buffers are rapidly depleting and lowered supply estimates for the rest of the year.