Gold prices fell 1% on Wednesday after data showed U.S. consumer prices rebounded as expected in July, dampening hopes for a sizeable rate cut from the Federal Reserve next month.
Spot gold fell about 1% to $2,440.62 per ounce by 1637 GMT. U.S. gold futures slipped 1.2% to $2,478.80.
The U.S. consumer price index increased 0.2% last month, after falling 0.1% in June, the Labor Department’s Bureau of Labor Statistics said. In the 12 months through July, the CPI increased 2.9%, after advancing 3% in June.
Markets now see a 41% chance of a 50 basis point rate cut by the Fed in September versus 50% prior to the release of U.S. CPI data, according to the CME FedWatch Tool.
We reached July ADV records in interest rate, equity index, metals, agricultural and options products. Our deeply liquid U.S. Treasury complex also hit a new July ADV record of 6.6M contracts.
Learn more: https://t.co/79h2kDFLYE
— CME Group (@CMEGroup) August 2, 2024
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.
Non-yielding gold has risen 19% so far this year after spot prices touched a record high of $2,483.60 on July 17, owing to firm safe-haven demand and Fed rate-cut expectations.
Elsewhere, spot silver fell 2.2% to $27.23, platinum dipped 1.6% to $921.27, and palladium was down 1.7% at $922.25.
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