Gold Stabilizes as Inflation Data Raises Rate Hike Odds

The price of gold has stabilized after a three-week decline, hovering around $4,350 an ounce. This comes as hotter-than-expected US inflation data raises the likelihood of a Federal Reserve interest rate hike later this week.

Underlying inflation rose in August, with the core consumer price index increasing 0.3 percent from the previous month. This has put pressure on the Fed to make its first rate increase in three years, with traders pricing in an almost 90 percent chance of a hike.

JPMorgan's Yuxuan Tang believes that any rate hike will attract criticism from US President Donald Trump, who has repeatedly called for lower rates. However, Tang also notes that a hold, hawkish, or dovish decision would likely push real yields lower and support gold prices.