Gold Surges as Softer Inflation Data Eases Rate Hike Expectations

Gold prices rose to around $4,200 an ounce on Wednesday as softer-than-expected US inflation data reduced expectations of another Federal Reserve rate hike in October.

The Personal Consumption Expenditures (PCE) price index increased by 0.3% in August, below the forecasted 0.4%, while core PCE rose 0.2%, also lower than expected.

On an annual basis, headline PCE inflation remained at 3.4%, below predictions of 3.7%. This shift in expectations has led to a decline in the probability of a 25 bps rate hike in October, now priced at under 40% from 70% last Friday.

New York Fed President John Williams stated that the Federal Reserve does not need to rush into another rate increase following this month's hike, further supporting gold prices.