Gold Prices Steady as US Inflation Cools, Rate Hike Chances Diminish
Gold prices stabilized on Thursday after reaching a more than two-month high, as traders took a breather following a rally fueled by declining US inflation. Spot gold was steady at $4,408.55 per ounce, while US gold futures for December delivery remained unchanged at $4,467.
The Consumer Price Index (CPI) data released on Wednesday showed that inflation cooled on a year-over-year basis for the second consecutive month, with a 3.4% increase in July, down from 3.5% in June. Traders are now pricing in only a 40% chance of an interest rate hike at the Federal Reserve's September meeting, down from about 54% seen a week earlier.
Fed policymakers may feel less pressure to raise interest rates next month due to moderating price pressures. Expectations of lower rates tend to support gold by reducing its opportunity cost. Traders are waiting for confirmation on this trend from the upcoming Producer Price Index (PPI) data, which is due later in the day.