Gold touches two-month peak, then slips as traders pause for inflation cues

Gold experienced a two-month high earlier in the trading day, but then slipped as traders paused to await inflation cues, according to wire material. The price of spot gold fell 0.5% to $4,383.53 per ounce by 0601 GMT, after initially surging about 1% to its highest level since June 5. US gold futures for December delivery also declined by 0.6% at $4,440.80.

Market analyst Tim Waterer noted that gold is currently in a consolidation phase, with traders anticipating Federal Reserve rate hikes but awaiting confirmation from the upcoming Producer Price Index (PPI) data. Over the past month, gold prices have risen by over 8%, as investors scaled back their expectations of US interest rate hikes in light of recent weaker economic data.

Geopolitical tensions between Iran and the US over the Gulf war remain unresolved, with no progress reported in talks to revive the interim deal from June. Fed policymakers are not expected to show significant urgency to raise interest rates next month following data revealing a 0.4 percentage point drop in year-over-year inflation for July, in line with economists' predictions.

The Consumer Price Index increased by 3.4% in the 12 months through July, down from 3.5% in June. Traders now estimate a 40% chance of a rate hike at the September meeting, down from approximately 54% a week earlier, according to the CME FedWatch Tool. Lower interest rates generally benefit gold by reducing the opportunity cost of holding the non-yielding asset.

Silver prices slipped by about 0.3% to $65.09 per ounce, having reached their highest level since June 22 in the previous session. Platinum fell by 0.8% at $1,741.96, and palladium decreased by 0.9% at $1,357.29.