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Gold rises to about $4,050 after softer US CPI boosts Fed hopes

June CPI cooled to 3.5% year over year, while core inflation was unchanged on the month, helping reduce expectations for a July rate hike.

Reported · Written up by our desk · Precious Metals

Gold prices climbed to around $4,050 in early Asian trading on Wednesday, supported by a rebound in sentiment after US inflation came in weaker than expected, according to FXStreet.

Data released by the US Bureau of Labor Statistics showed headline CPI eased to 3.5% year over year in June from 4.2% in May, below the 3.8% consensus. On a monthly basis, headline CPI fell 0.4% versus a 0.5% rise in May, while core CPI was unchanged month over month and rose 2.6% year over year.

After the print, traders scaled back bets that the Fed would hike rates at its July 28 to 29 meeting, which helped support the non-yielding metal. Tai Wong, an independent metals trader, said the report should sharply drop rate hike expectations at least for the July and September meetings.

FXStreet also noted that concerns tied to oil-driven inflation could keep interest rates elevated longer, which may weigh on gold. It added that US Central Command said it has begun an additional round of strikes against Iran, while highlighting gold's typical role as a safe haven and inflation hedge.

Latest closeGold $4,058.20 ▲1.5%

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