Gold Slips to $4,340 as US Inflation Data Strengthens Rate Hike Odds
Spot gold trades near $4,340 per ounce after August core CPI rose 0.3 percent. The market now prices an 88 percent probability of a Federal Reserve rate increase this week.
Spot gold traded at $4,339.96 per ounce at 8:30 am Singapore time. The metal was down 0.2 percent in the latest session. This marks the third consecutive week of declines for bullion.
US core consumer price index data released on September 11 showed a 0.3 percent monthly increase. The figure exceeded market expectations. Traders responded by raising bets on higher interest rates.
Fed Rate Hike Probability Rises
Market participants price an 88 percent chance of a rate hike in September. This would be the first increase in three years. Higher borrowing costs reduce the appeal of non-yielding assets like gold.
President Donald Trump called for lower interest rates on Sunday. He expressed frustration with the central bank’s recent stance. A rate hike could intensify political pressure on the Federal Reserve.
Geopolitical Tensions Sustain Inflation Pressures
Brent crude oil approached $107 per barrel. The price gained nearly 9 percent during the previous week. Escalating conflict in the Middle East continues to drive energy costs higher.
A planned meeting between Iran and Gulf nations to create a shipping lane was postponed. The Strait of Hormuz remains a critical chokepoint for global energy supplies. Delays in establishing the lane keep supply risks elevated.
Precious Metals Face Broad Declines
Silver dropped 0.8 percent to $64 per ounce. Platinum and palladium also recorded losses in the same session. The Bloomberg Dollar Spot Index rose slightly, reflecting a stronger US currency.
Gold has traded in a narrow range near $4,400 since July. Prices bounced from a low close to $4,000 per ounce. Investors continue to view the metal as a portfolio hedge despite near-term headwinds. Source: Gold (Google News).
