Gold rebounds towards 10-week high as markets brace for US CPI data

Gold prices surged nearly 1% on Wednesday, buoyed by diminished expectations of Federal Reserve rate hikes next month as investors awaited crucial U.S. inflation data. The precious metal climbed to a 10-week high of $4,406.34 per ounce by 0330 GMT. U.S. gold futures for December delivery also increased by 0.6% to $4,466.70. Market analyst Kelvin Wong attributed gold's rise to the Fed's reduced rate hike projections.

Bullion had climbed to a high on Tuesday before hitting technical resistance at the 100-day moving average, before closing lower for the second consecutive day this month. Technical indicators indicated a bullish break above the $4,200 level, generating positive momentum. Bullion experienced its biggest weekly gain since January following weaker-than-expected jobs data, causing traders to reduce their bets on U.S. rate hikes.

The probability of a September hike has decreased to 50%, down from 60% prior to the jobs report, according to the CME FedWatch Tool. Lower interest rates generally favor gold, which yields no interest. U.S. Consumer Price Index data released later in the day could alter the interest rate outlook. Fed Bank of Chicago President Austan Goolsbee expressed greater concern over excessive inflation than labor market slack.

Oil prices continued to rise as separate attacks on shipping were reported by the U.S. and Iran-aligned Houthis in the Gulf of Yemen, while prospects for ending the Iran war appeared to diminish, with Tehran stating the Strait of Hormuz would remain closed unless Washington accepted its demands. Silver prices rose 1.2% to $65.46 per ounce, trading below their June 22 high, while platinum and palladium climbed 0.6% and 0.8%, respectively.