Gold Consolidates Gains as Fed Hike Expectations Cool

Gold prices stabilized near their two-month high on Thursday after a rally driven by subdued US inflation, with traders waiting for an upcoming producer price report to confirm prospects of Federal Reserve rate hikes.

According to Tim Waterer, chief market analyst at KCM Trade, gold is in consolidation mode following its post-CPI gains, with near-term expectations of a Fed rate hike being reassessed.

The Consumer Price Index rose 3.4 per cent in the 12 months through July, down from 3.5 per cent in June, which has led to a decrease in expectations of an interest rate hike at the Fed's September meeting to 40 per cent, down from about 54 per cent seen a week before.

The Producer Price Index (PPI), due later in the day, will provide further insight into price pressures, while gold futures for December delivery were steady at US$4,467.