Gold Recovers as Fed Hike Bets Fall to 40%
Gold prices have recovered from their intraday losses after the Federal Reserve (Fed) reduced the probability of a September rate hike to 40% overnight. This shift in expectations has offset the impact of geopolitical tensions and weighed on the US Dollar (USD).
Data released earlier showed that the US Producer Price Index (PPI) was unchanged in July, falling short of expectations for a 0.2% rise. The yearly rate decelerated from 5.5% in June to 4.7%, also coming in below the 4.9% estimate.
US CPI inflation came in very much in line with market expectations, not strong enough or weak enough to break the DXY Index out of its lower 99.4-100.1 range set after USD/JPY's sell-off from the joint US-Japan interventions, according to economists at DBS Group Research.
Chicago Fed President Austan Goolsbee pointed out that recent price spikes are largely driven by temporary tariff and energy factors, favoring patience rather than aggressive monetary tightening. However, Cleveland Fed President Beth Hammack argued that progress on inflation is still insufficient, asserting that further interest rate increases may be needed to secure price stability.
The US macro data, monthly Retail Sales and the Preliminary University of Michigan Consumer Sentiment Index, will provide some impetus later during the North American session. The precious metal holds above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, with a dense cluster of Fibonacci supports suggesting the broader uptrend is still intact.