Softer US CPI data fuels Fed rate cut bets, lifting XAU/USD to multi-week highs near $4,050.
Gold prices surged to around $4,050 in early Asian trading Wednesday after US inflation data undershot expectations, reviving hopes for a less aggressive Federal Reserve. The June Consumer Price Index rose 3.5% year-over-year, below the 3.8% consensus, while monthly headline CPI fell 0.4% versus a 0.5% gain in May.
Core CPI remained flat month-over-month and climbed 2.6% annually, down from 2.9% in May and under the 2.8% forecast. The softer print led traders to abandon bets on a July rate hike, with markets now pricing in potential cuts by September.
The rally in non-yielding assets like gold reflects shifting expectations, though lingering oil-driven inflation concerns may limit further gains. Metals traders noted the report’s impact on near-term Fed policy, with core inflation stability easing pressure for immediate tightening.