Gold pauses after tame US inflation fuels rally to over two-month peak
Fed policymakers will likely feel little fresh urgency to raise interest rates in September after Wednesday’s data shows inflation cooled
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GOLD steadied near a more than two-month high on Thursday (Aug 13) as traders paused after a rally fuelled by cooling US inflation, with attention turning to an upcoming producer price report for clues to prospects of near-term US Federal Reserve rate hikes.
Spot gold was little changed at US$4,408.55 per ounce by 0336 GMT, after jumping about 1 per cent earlier to its highest since Jun 5. US gold futures for December delivery were steady at US$4,467.
“Gold is in consolidation mode today after its post-consumer price indexg ains, with near-term expectations of a Fed rate hike being dialled back another notch,” said Tim Waterer, chief market analyst at KCM Trade.
“Traders appear content to wait for confirmation from the upcoming producer price index data before committing to the next leg higher.”
Fed policymakers are likely to feel little fresh urgency to raise interest rates in September after data on Wednesday showed inflation cooled on a year-over-year basis for a second straight month.
The CPI rose 3.4 per cent in the 12 months through July, down from 3.5 per cent in June, the Bureau of Labor Statistics reported, in line with economists’ expectations.
Traders are now pricing in only a 40 per cent chance of an interest rate hike at the Fed’s September meeting, down from about 54 per cent seen a week before, according to the CME FedWatch Tool.
Expectations of lower rates tend to support gold by lowering the opportunity cost of holding the non-yielding asset.
Attention now shifts to the PPI, due later in the day, for confirmation that price pressures are moderating.
On the geopolitical front, Iran and the US remain at loggerheads over efforts to agree on a permanent end to the war in the Gulf, according to a senior Iranian source, who said there had been no progress in talks to revive the interim deal agreed in June.
In other metals, spot silver gained about 0.3 per cent to US$65.47 per ounce, having climbed to its highest since Jun 22 in the previous session.
Platinum lost 0.4 per cent at US$1,749.70, and palladium fell 0.5 per cent at US$1,362.10. REUTERS
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