Gold nears 10-week peak ahead of US inflation data
Gold prices climbed close to a 10-week high Wednesday as investors pulled back on bets for another Federal Reserve rate hike next month, waiting instead for U.S. inflation data that could shift the central bank’s policy path.
Spot gold rose 0.9% to $2,406.34 an ounce by 0330 GMT. U.S. gold futures for December delivery gained 0.6% to $2,466.70. The metal had touched its highest level since early June on Tuesday before stalling at its 100-day moving average near $2,387 and closing lower for the second time this month.
Rate expectations drive the rally
Traders have scaled back expectations for a September rate increase after last week’s weaker-than-expected jobs report. The CME FedWatch Tool now shows a 50% chance of a hike, down from 60% before the data.
“The primary driver for gold is the reduction in pricing of rate hikes by the Fed,” said Kelvin Wong, senior market analyst at OANDA. “In terms of technical positioning, we started to see a bullish break late last week above that $2,200 level, which also created a positive momentum feedback loop.”
Gold posted its largest weekly gain since January on Friday, buoyed by the softer labor market figures. Lower interest rates tend to support bullion, which pays no yield.
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Inflation data could reset the outlook
The U.S. Consumer Price Index report due later Wednesday could reshape the Fed’s rate trajectory. Chicago Fed President Austan Goolsbee said he remains more concerned about inflation staying too high than about any weakness in the labor market.
If the CPI comes in cooler than expected, bets on further tightening could fade further, giving gold another lift. But a hotter print could revive hike expectations, pressuring the metal.
This isn’t just about gold. The broader commodities complex is also reacting to geopolitical tensions. Oil prices extended gains Tuesday after the U.S. and Yemen’s Iran-aligned Houthis reported separate attacks on shipping. Tehran said the Strait of Hormuz would remain closed unless Washington accepted its conditions, dimming hopes for a quick resolution to the conflict.
Silver followed gold higher, rising 1.2% to $28.46 an ounce but staying below its June 22 peak. Platinum gained 0.6% to $975.10, while palladium added 0.8% to $970.86.
For now, the market is stuck in a holding pattern—traders are reluctant to make big moves before the inflation numbers land. If the data confirms a slowing economy, gold could break through that 100-day average and test new highs. If not, the metal may retreat again, waiting for the next signal.
