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Gold rebounds as soft US CPI cools Fed rate-hike odds
XAU/USD was up nearly 2% after June CPI fell 0.4% month over month, and CME FedWatch showed the chance of a July hike dropping to 16% from 40%.
Gold prices rebounded sharply on Tuesday, retreating from the prior session’s losses after softer-than-expected US inflation data reduced expectations for a near term Federal Reserve interest rate hike, FXStreet said. At the time of writing, XAU/USD traded around $4,080, up nearly 2% on the day after reaching a two week low of $3,983 earlier in the Asian session.
The Consumer Price Index fell 0.4% month over month in June, versus a forecast for a 0.1% decline, and followed May’s 0.5% increase, according to the report. Annual inflation eased to 3.5% from 4.2%, while core CPI was flat on the month and the annual core rate slowed to 2.6% from 2.9%.
Following the data, the US Dollar and US Treasury yields came under selling pressure as traders pared Fed rate hike expectations, FXStreet reported, citing the CME FedWatch Tool. The probability of a July hike fell to 16% from 40%, while odds for a September rate increase eased to 60% from 74%.
Despite the inflation relief, the outlook for gold remained constrained by renewed attention to the inflation impact of higher oil prices amid US Iran tensions. West Texas Intermediate traded around $80.00, up nearly 12% for the week, after the US carried out strikes against Iran for a third consecutive night and President Donald Trump said a naval blockade would take effect at 20:00 GMT, FXStreet added.
Latest closeGold $4,011.00 ▼2.3%