Gold Rallies as CPI Report Splits Market on Fed Rate Hike

The precious metals market saw a rally in gold and silver prices on Wednesday, after the July Consumer Price Index (CPI) report matched expectations. The CPI rose 0.1% in July and 3.4% from a year earlier, while core CPI rose 0.2% on the month and 2.5% year-over-year.

This left the market split on whether the Federal Reserve will raise rates at its September meeting, with the market-implied probability of a 25-basis-point hike remaining near 48%. The 10-year Treasury yield is trading near 4.7%, off recent highs, while the U.S. dollar is softer.

The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations, and safe-haven demand. Brent crude is holding near $89 a barrel and U.S. crude is near $84, keeping fuel costs elevated even as CPI came in line with expectations.