Gold Surges on Cooling Rate Hike Bets Amid July Inflation Data

Gold prices have reached a two-month high due to the July US inflation data, which has reduced expectations of an immediate interest rate hike by the Federal Reserve. The recent figures show a modest 0.1% increase in inflation, matching market forecasts.

This has provided relief to investors who were concerned about aggressive rate hikes at the September meeting. Market tools now indicate a roughly 40% chance of a rate hike in September, down from 46% before the inflation report. Gold typically performs better when interest rate expectations remain steady or decline, making it more attractive compared to bonds and savings accounts.

Silver prices have pulled back slightly after a strong performance earlier this month, possibly due to investors locking in profits. The precious metals market is also influenced by geopolitical tensions, particularly shipping lanes and conflicts in the Middle East, which often drives investors toward gold as a safe-haven asset.