Gold Prices Rise on Soft US Inflation Data and Lower Rate Hike Bets

Gold prices rose by 0.5% to $4,175.19 an ounce on Thursday as softer US inflation data reduced expectations of another Federal Reserve rate increase in October.

The Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, showed a 0.3% increase from the previous month, while core PCE inflation rose 0.2%. On an annual basis, headline PCE inflation increased to 3.4%, and core PCE inflation reached 3%.

Markets were pricing in a 38% probability of a rate hike in October, down from 45% before the data was released.

The next major test for interest-rate expectations will be the US nonfarm payrolls report for September, scheduled for release on Friday.