Gold Surges Past $4,500 as Inflation Data Meets Expectations
Gold prices surged to $4,502.70 per ounce on Wednesday, marking the first time in nearly two months that it has broken through this major psychological level.
The Comex gold futures were driven by July U.S. inflation data, which came in fully in line with expectations. The Consumer Price Index rose 3.4% year-over-year in July and 0.1% month-over-month, while core CPI slowed to 2.5% year-over-year.
The inflation data was widely seen as a key policy reference ahead of the Fed's September meeting. After the data release, interest rate swap pricing showed that the probability of a September rate hike edged down to about 45%, from roughly 47% previously.
Seema Shah, Chief Global Strategist at Principal Asset Management, noted that combined with last week's unexpectedly negative nonfarm payrolls reading, this CPI report should help cool rate-hike expectations. However, she also cautioned that inflationary risks stemming from the ongoing closure of the Strait of Hormuz - with its potential to drive energy prices higher - should not be overlooked.