Gold Prices Climb to Over Two-Month High, Break Above 100-Day Moving Average as U.S. CPI Dampens Rate Hike Expectations

Gold prices climbed to their highest level in over two months on Wednesday (12th), as the latest U.S. inflation data matched market expectations, reinforcing the possibility of the Federal Reserve (Fed) holding rates steady in September and supporting gold, a non-interest-bearing asset.

Spot gold rose 0.9%, trading at $4,406.64 per ounce, breaking above its 100-day moving average, currently at $4,387.22. Earlier in the session, it gained over 1%, reaching its highest level since June 5.

December-delivery gold futures closed up 0.6% at $4,467.50 per ounce.

The U.S. reported a slight 0.1% rise in July’s Consumer Price Index (CPI) on Wednesday, in line with market expectations, compared to a 0.4% decline in June. This latest data may weaken the urgency for the Fed to raise rates immediately.

"The CPI data was encouraging," said Edward Meir, analyst at Marex. "Higher than last month, but in line with expectations, along with a weaker dollar and technical factors, helped gold ride this wave."

The CME Group’s FedWatch tool shows traders now expect a roughly 40% chance of a rate hike at the Fed’s September meeting, down from 46% before the CPI release.

The Fed held its benchmark interest rate steady in the 3.50%-3.75% range on July 29, though three of the twelve voting policymakers dissented, advocating for a rate hike. Higher interest rates typically reduce the appeal of non-yielding assets like gold.

Markets are now turning focus to Thursday’s Producer Price Index (PPI) report.

Meanwhile, the U.S. and Iran-aligned Yemeni Houthi militants separately reported attacks on shipping on Tuesday, reigniting market concerns over geopolitical tensions as prospects for ending the Iran war appear to dim.

"If hostilities escalate again, oil prices could return toward $100 per barrel, which would push rates higher and put pressure on gold," Meir said.

Other Precious Metals Trading

Spot silver rose 1.3%, trading at $65.49 per ounce, briefly touching its highest level since June 22 during the session.

Spot platinum gained 0.9%, trading at $1,759.50 per ounce.

Spot palladium rose 0.5%, trading at $1,367.23 per ounce.