Gold Recovers as Inflation Pressures Remain

Gold prices are showing signs of recovery after inflation data released on Thursday pushed the dollar higher and Treasury yields up, which typically weigh on gold. The XAU/USD rose 0.7% to $4,625.83 an ounce, while Gold Futures gained 0.6% to $4,680.50.

The Personal Consumption Expenditures price index rose 3.7% in the year through July, slightly above economists' forecast of 3.6%. The Federal Reserve's target is 2%, and this data nudged up expectations for a September rate hike, with the probability now around 40%, up from about 36% before.

ANZ analysts said that despite the inflation setback, the upside should remain limited because the debasement trade continues to attract buyers. This theme has provided a counterweight to the rate pressure created by inflation, and gold remains about 14% higher this month after Treasury intervention gave the rally fresh momentum.