Gold Prices Rebound as Traders Weigh US-Iran Deal and Inflation Data

Gold prices declined from a two-month high on Wednesday as traders weighed the prospects of a US-Iran deal to reopen the Strait of Hormuz and awaited key US inflation data. The precious metal fell by as much as 0.8% in its biggest intraday decline since July, with spot gold dropping 0.5% to $4,369.15 an ounce at 4:40 pm in New York.

The rebound in energy prices following Iran's announcement to keep the Strait of Hormuz shut until its demands are met clouded the outlook for the US Federal Reserve's interest-rate hike path. Traders held back from making big bets ahead of the release of the US consumer price index, which is expected to rise 0.1% in July after a 0.4% decline in June.

Despite recent gains, gold remains about 17% below levels before the Iran war began in late February. The precious metal has rallied above the key $4,000-an-ounce support threshold in recent weeks, with renewed investor appetite backed by an increase in central bank purchases.