Gold Prices Soar on Fed Hike Dampening Inflation Data

Gold prices surged to their highest level in over two months on Wednesday after US inflation data came in line with estimates, dampening expectations of a Federal Reserve interest rate hike next month.

The spot price of gold rose by 0.9% to $4,406.64 per ounce, while US gold futures settled 0.6% higher at $4,467.5.

Marex analyst Edward Meir attributed the increase in gold prices to 'technicals' and a weaker dollar, which bolstered bets that the Fed will keep rates on hold in September.

The inflation data showed US consumer prices rose 0.1% in July, matching expectations, after dropping 0.4% in June. This development reduced the likelihood of an interest rate hike at the Fed's next meeting from 46% to around 40%, according to the CME FedWatch Tool.

Meir also warned that a resumption of hostilities between the US and Iran could push oil prices back up towards $100, which would increase interest rates and make gold less attractive.