US Inflation Data Boosts Rate Hike Odds to 87%

Gold prices remained relatively stable on Friday despite the release of US inflation data that strengthened expectations for an interest rate hike by the Federal Reserve next week. The Consumer Price Index rose 3.4% in August, matching economists' predictions and increasing hopes for a rate increase.

The Labor Department's Bureau of Labor Statistics reported a 0.4% increase in CPI from July to August, which was higher than expected. U.S. gasoline prices surged 3.9%, accounting for more than a third of the CPI rise over the month.

Traders are now pricing in an 87% chance of a rate hike at the Fed's policy meeting next week, up from 67% before the inflation data. However, Kyle Rodda from Capital.com notes that while markets may be betting on a hike, committee members may not be as decisive.

Gold and silver remain within strong support levels, with some analysts downplaying the impact of a potential rate increase, saying it's 'symbolic' given the bond market has already tightened.