Gold Holds Near Two-Month High Amid Cooling US Inflation

Gold prices held steady near a two-month high on Thursday as traders took a cautious approach following a rally fueled by cooling US inflation data. The Consumer Price Index (CPI) rose 3.4% in the 12 months through July, down from 3.5% in June.

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

Traders are now pricing in only a 40% chance of an interest rate hike at the Fed's September meeting, down from about 54% seen a week before. This decrease in rate hike expectations tends to support gold by lowering the opportunity cost of holding the non-yielding asset.