Gold Prices Stabilize as US Inflation Data Raises Rate Hike Odds

Gold prices stabilized on Monday, September 14, after three weeks of decline, as hotter-than-expected US inflation data increased the likelihood of a Federal Reserve interest rate hike later this week.

The core consumer price index rose by 0.3% in August, adding pressure on the Fed to raise rates for the first time in three years, with traders pricing an almost 90% chance of it happening.

Gold, trading near $4,350 per ounce, typically performs poorly when interest rates rise due to its non-interest-bearing nature.

However, JPMorgan's Asia head of rates & FX strategy, Yuxuan Tang, believes that a rate hike would be negative for gold in the short term but positive in the medium and long terms, as it would add pressure to parts of the economy already struggling with elevated energy costs and increase recession risk.