Gold Falls Amid Soaring Energy Prices, Despite Soft US Inflation
Gold prices fell on Wednesday despite softer-than-expected US inflation data, posting a monthly loss of 6.6%. The metal had initially risen following the release of milder inflation numbers, but ultimately gave up its gains as rising energy prices took center stage.
The Personal Consumption Expenditures (PCE) Price Index rose 0.3% last month, and while this was lower than expected, it still weighed on investor sentiment. The core PCE Price Index rose 3.0% year-on-year in August, which may prompt the Federal Reserve to keep interest rates high.
Financial markets are now pricing in around a 39% probability of an interest rate hike in October, down from about 45% before the PCE data were released. The dollar weakened following the data but remained on track for a monthly gain, making dollar-denominated gold more expensive for overseas buyers.