Gold Sees Brief Bounce Despite Hawkish Inflation Data and Rising Rate Hike Odds

Gold prices surged on Friday, rebounding from recent losses and finding a short-term floor despite strong US inflation data that lifted expectations of a Federal Reserve rate hike next week. Spot gold rose 1.6% to $4,385.14 per ounce by 9:23 am EDT (1323 GMT), but was down about 1% for the week so far.

According to Tai Wong, an independent metals trader, 'Gold is recovering rapidly after a brief dip, as CPI data may be cementing expectations of a Fed rate hike next week. The volatility is somewhat muted, as market had a hike 70% priced in.'

The US Consumer Price Index increased 0.4% last month after edging up 0.1% in July, with consumer inflation advancing 3.4% over the past 12 months through August.