Gold Soars to Two-Month Highs as US Inflation Data Dampens Rate Hike Bets

Gold prices rose to over two-month highs on Wednesday as US inflation data matched expectations, reducing bets that the Federal Reserve will raise interest rates in September. Spot gold climbed above its 100-day moving average and hit a high of $4,406.64 per ounce.

The US Consumer Price Index (CPI) increased by 0.1% in July, in line with estimates, which may weaken the argument for an interest rate hike from the Fed next month. Marex analyst Edward Meir said the CPI data was 'encouraging' and that gold is benefiting from a weaker dollar and technicals.

Traders are now pricing in about a 40% chance of an interest rate hike at the Fed's September meeting, down from 46% before the inflation data. A higher interest rate environment tends to reduce the appeal of non-yielding gold.