Gold Prices Retreat as Inflation Data Dampens Rate Hike Expectations

Gold prices fell on Friday after investors locked in profits following a rally to a two-month high, driven by mild US inflation data that undermined expectations of a September Federal Reserve rate hike. The price of spot gold dropped 0.5% to $4,330.37 per ounce, while US gold futures for December delivery slid 0.8% to $4,386.80.

The news of unchanged US producer prices in July, with goods prices falling and services increasing marginally, bolstered market expectations that the Fed might keep interest rates unchanged next month.

However, Cleveland Fed President Beth Hammack reiterated her view that the US central bank should raise rates immediately to restrain growth and too-high inflation.