Gold pauses after tame US inflation fuels rally to over two-month peak

Gold paused near a two-month peak on Thursday as traders took a breather after a rally driven by cooling US inflation. Spot gold hovered around $4,408.55 per ounce, edging slightly higher after a 1% jump that pushed it to its highest level since June 5. US gold futures for December delivery remained steady at $4,467.

Analysts noted that gold was in a consolidation phase, awaiting further clues from upcoming economic data. Tim Waterer, chief market analyst at KCM Trade, stated that traders were content to wait for confirmation from the upcoming Producer Price Index (PPI) data before making any decisions about the next move.

Recent data showed that the US Consumer Price Index (CPI) rose 3.4% over the past year, down from 3.5% in June, in line with market expectations. This cooling inflation trend has reduced the chances of an interest rate hike at the Federal Reserve's September meeting to 40%, down from about 54% a week earlier according to the CME FedWatch Tool.

Traders are now focusing on the PPI, released later in the day, to gauge if price pressures are easing. Geopolitical tensions between Iran and the United States persist, with no progress reported in talks to finalize a permanent deal to end the war in the Gulf. Meanwhile, silver showed modest gains, rising 0.3% to $65.47 per ounce, while platinum and palladium saw slight declines of 0.4% and 0.5% respectively.