Gold Hits Two-Month High as Fed Hike Odds Ease
Gold prices strengthened during Wednesday's trading (Aug 12), touching a more-than-two-month high after US inflation data aligned with market expectations. Spot gold rose approximately 0.9% to US$4,406.64 per troy ounce, having surged over 1% to reach its highest level since June 5.
Technical momentum also supported the rally after gold broke through the 100-day moving average, situated around US$4,387. Meanwhile, US gold futures closed up about 0.6% at US$4,467.50.
US CPI data showed inflation rising 0.1% month-on-month in July—matching market forecasts—following a 0.4% decline in June. The figures were deemed insufficiently "hot" to bolster the case for a Federal Reserve interest rate hike in September.
Market reaction was reflected in diminished expectations for a rate hike; the probability of a Fed hike in September fell to around 40% from approximately 46% prior to the CPI release. A weaker dollar and technical momentum provided additional support for gold.
Investor focus has now shifted to the Producer Price Index (PPI) data due on Thursday. Geopolitically, tensions in the Middle East remain a concern following reports of attacks on shipping lanes. Should the conflict escalate and push oil prices toward US$100, inflationary risks could resurface, complicating gold's trajectory.
Newsmaker Analysis: CPI data meeting expectations has eased hawkish pressure on the Fed, helping gold hold above US$4,400. As long as the dollar and yields remain contained, the potential for a rise toward the US$4,450–US$4,500 range remains. However, a hotter-than-expected PPI or a surge in oil prices could revive rate-hike expectations and trigger a short-term correction for gold.
Source: Newsmaker.id
