Gold Bounces on Dollar Weakness, Fed Rate Hike Fears Linger
Gold rebounded on Friday after falling nearly 2% on Thursday as surging oil prices stoked inflation concerns and drove US Treasury yields to multi-year highs. The precious metal's advance was limited, however, by strengthened expectations that the Federal Reserve (Fed) could raise interest rates next week.
The US Consumer Price Index (CPI) report came in broadly in line with forecasts, but did little to change market expectations of a rate hike. Headline inflation rose 0.4% month-over-month in August, matching forecasts and accelerating from the previous reading of 0.1%. The annual rate held steady at 3.4%, also in line with market expectations.
Core CPI, which excludes volatile food and energy prices, increased 0.3% month-over-month, above the 0.2% forecast and the previous reading of 0.2%. Annual core inflation eased to 2.4% from 2.5%, matching expectations.
The US Dollar strengthened following the release but struggled to hold its gains. The US Dollar Index (DXY) traded around 99 after climbing to 99.36 in the immediate reaction to the data.