Gold Prices Rebound Amid Fed Rate Hike Expectations

On September 11, spot gold prices rebounded, recovering most of the previous day's losses. The U.S. dollar decline and falling U.S. Treasury yields and oil prices provided support for precious metals. However, the latest U.S. Consumer Price Index (CPI) data reinforced market expectations that the Federal Reserve may raise interest rates next week, limiting gold's upside potential.

The CPI rose by 0.4% month-on-month in August, meeting forecasts and exceeding July's 0.1% increase. The year-on-year increase remained at 3.4%, consistent with estimates. TD Securities stated that despite headwinds from rising energy prices and a higher likelihood of a near-term Fed rate hike, gold has maintained support at elevated levels.

From a medium- to long-term perspective, TD Securities noted that renewed expectations of U.S. dollar depreciation, continued gold purchases by central banks worldwide, and renewed inflows into ETFs are building solid bottom-line support for gold prices.