Gold Surges to Two-Month High as US Inflation Data Eases Rate-Hike Bets

Gold prices steadied on Thursday after US inflation data showed a cooling trend, reducing expectations of an imminent Federal Reserve rate hike. Spot gold climbed 0.6% to $4,433.62 per ounce, its highest since June 5. The data on Wednesday revealed that the consumer price index (CPI) rose 3.4% in July, down from 3.5% in June, which is in line with economists' expectations.

The Federal Reserve may feel little urgency to raise interest rates next month after this data, but they may not take comfort in knowing that monetary policy is tight enough to continue the easing trend. Traders are now pricing in only a 40% chance of an interest rate hike at the Fed's September meeting, down from about 54% seen a week before.

The upcoming producer price index (PPI) data will provide further confirmation on whether price pressures are moderating. The CPI print for July did not capture the recent rise in oil prices due to continued attacks on ships in the Middle East and stalled talks to end the Iran war.