Gold prices hold near two-month high as traders await US PPI data

Gold prices remained largely stable near their highest level in more than two months on Thursday, as investors paused to assess the metal’s recent gains following softer-than-expected signals from US inflation data.

Gold prices remained largely stable near their highest level in more than two months on Thursday, as investors paused to assess the metal’s recent gains following softer-than-expected signals from US inflation data.

Spot gold was trading at around $4,408.55 per ounce by 0336 GMT, little changed from the previous session. The precious metal had earlier climbed nearly 1%, reaching its highest level since June 5. Meanwhile, US gold futures for December delivery were broadly steady at $4,467 per ounce.

The latest movement came after gold staged a strong rally following the release of US consumer inflation figures. Investors are now turning their attention to the US Producer Price Index (PPI), due later on Thursday, which could provide further indications about the direction of monetary policy and interest rates.

Tim Waterer, chief market analyst at KCM Trade, said gold was undergoing a period of consolidation after its gains following the consumer price data.

He noted that expectations for a Federal Reserve rate hike had weakened further, while traders were waiting for the PPI report before making significant new moves in the market.

US Inflation Cools

Market sentiment was influenced by Wednesday’s US Consumer Price Index (CPI) figures, which showed that inflation moderated for a second consecutive month on an annual basis.

According to the US Bureau of Labor Statistics, consumer prices increased 3.4% in the 12 months through July, compared with a 3.5% rise in June. The reading was broadly in line with economists’ expectations.

The data reduced expectations that the Federal Reserve would move toward higher interest rates in the near term. Market participants are now closely monitoring incoming economic indicators to determine whether price pressures are continuing to ease.

According to the CME FedWatch Tool, traders were pricing in roughly a 40% probability of a Federal Reserve rate hike at the September meeting, down from approximately 54% a week earlier.

Lower Rate Expectations Support Gold

Gold generally benefits when expectations for interest rates decline because lower rates reduce the opportunity cost of holding the non-yielding precious metal.

The shift in expectations has therefore provided additional support to bullion, although investors remain cautious ahead of further inflation data.

The upcoming PPI report is expected to play an important role in determining whether the recent moderation in consumer inflation is also reflected at the producer level. A weaker-than-expected reading could further reinforce expectations for a less aggressive Federal Reserve stance, potentially providing additional momentum to gold.

Conversely, stronger producer inflation could revive concerns about persistent price pressures and limit gains in the precious metals market.

Geopolitical Risks Remain in Focus

Investors are also keeping an eye on geopolitical developments, particularly tensions between Iran and the United States.

A senior Iranian source said Tehran and Washington remained divided over efforts to reach a permanent agreement to end the conflict in the Gulf. According to the source, there had been no significant progress in negotiations aimed at reviving an interim agreement reached in June.

Continued geopolitical uncertainty can contribute to demand for safe-haven assets such as gold, although market participants remain focused primarily on monetary policy and economic data.

Other Precious Metals

Elsewhere in the precious metals market, spot silver rose around 0.3% to $65.47 per ounce. Silver had reached its highest level since June 22 during the previous session.

Platinum prices declined 0.4% to $1,749.70 per ounce, while palladium fell 0.5% to $1,362.10.