Gold Eases After Two-Month High as Traders Reassess Fed Rate Path

Gold prices pulled back on Thursday after reaching a two-month high, as traders balanced softer U.S. inflation against the risk that higher energy prices could keep the Federal Reserve cautious on interest rates.

Spot gold fell 0.5% to $4,388.64 an ounce, while gold futures declined 0.5% to $4,446.12. Bullion had gained around 1% after U.S. consumer prices rose just 0.1% month on month in July, matching expectations and suggesting that energy-related inflation pressures had not yet intensified.

The softer CPI report reduced expectations for a September Fed rate hike. CME FedWatch indicated roughly a 38%-40% probability, down from about 46% before the data. The Fed held rates at 3.50%-3.75% in July, although three policymakers supported a hike.

However, gold faces renewed pressure from energy-market risks linked to the U.S.-Iran conflict and continued restrictions around the Strait of Hormuz. Higher oil prices could eventually add to inflation and complicate the Fed’s policy outlook.

Gold’s technical picture has improved after moving above its 100-day moving average, but resistance remains near $4,450, followed by the 200-day moving average around $4,499.

For Southeast Asian traders, the next major catalyst is U.S. producer price data, followed by further inflation and employment figures ahead of the September Fed meeting. The key question is whether cooling inflation will support lower-rate expectations, or whether energy costs force the Fed to remain hawkish.