Hotter-than-expected US CPI data raises Fed rate hike odds to 30%, pressuring non-yielding gold despite mild gains.
Gold (XAU/USD) trades slightly higher at $4,720 in early Asian trading but faces headwinds from stronger US inflation data. The US Consumer Price Index rose 3.8% year-over-year in April, exceeding expectations and marking the highest print since May 2023.
The Bureau of Labor Statistics reported a 0.6% monthly increase in headline CPI, matching estimates, while core CPI climbed 0.4% month-over-month. The data prompted traders to raise the probability of a Federal Reserve rate hike by year-end to 30%, according to the CME FedWatch tool.
Higher interest rates reduce gold’s appeal as it does not yield interest. Traders are also monitoring a Trump-Xi summit in Beijing later this week for potential geopolitical shifts.