Gold climbs on dip-buying, Fed rate hike bets rise after US inflation data

Gold prices surged over 1 percent on Friday, bouncing back from recent declines and locating a short-term support level despite robust U.S. inflation figures fueling expectations of an interest rate increase by the Federal Reserve the following week. Spot gold climbed 1.2 percent to $4,366.69 per ounce by 11:22 a.m. EDT (1522 GMT). However, the asset had slipped about 1.4 percent for the week up to that point.

Gold is experiencing a swift recovery following a brief setback, as the Consumer Price Index (CPI) data might be solidifying the anticipation of a Federal Reserve rate hike next week. The market's volatility is somewhat reduced, as there was a 70 percent probability priced in for a rate hike, according to Tai Wong, an independent metals trader.

The price movements indicate that gold is establishing a short-term base after the previous decline. U.S. gold futures rose 0.1 percent to $4,409.30. On Thursday, prices fell nearly 2 percent following U.S. Producer Price Index data showing an increase in prices in line with expectations in August. The Consumer Price Index rose 0.4 percent last month following a 0.1 percent increase in July, as reported by the labor department's Bureau of Labor Statistics on Friday. Oil prices slid on Friday but remained stable.