Gold Rallies 1% Amid Fed Hike Bets as Inflation Fears Rise

Gold prices rose by over 1% on Friday as investors bought back into the metal after recent losses. The rebound came despite strong US inflation data, which boosted expectations of a Federal Reserve rate hike next week.

The Consumer Price Index (CPI) increased 0.4% last month, while in the 12 months through August, consumer inflation advanced 3.4%. This led to higher oil prices, stoking inflation fears and bolstering expectations of a Fed rate hike.

According to Tai Wong, an independent metals trader, 'Gold is recovering rapidly after a brief dip, as CPI data may be cementing expectations of a Fed rate hike next week.' He noted that the market had already priced in a 70% chance of a hike before the data release.

The spot price of gold rose to $4,385.14 per ounce, while US gold futures gained 0.5% to $4,426.90. Silver prices also rebounded, rising by 2.1% to $64.86 per ounce.