Ella 
After the release of the U.S. Consumer Price Index (CPI), gold prices rose slightly to around $1,910 in Asia on Thursday, ending two consecutive declines.
The U.S. CPI annual rate rose from 3.2% to 3.7% in August, higher than market expectations of 3.6%. In addition, the core CPI monthly rate unexpectedly rose from 0.2% to 0.3%, and market expectations remained unchanged.
However, the core CPI annual rate remained stable at 4.3%, compared with the previous value of 4.7%.
The data suggests that while overall inflation may be slowing, core CPI remains relatively stable. The information initially caused U.S. Treasury yields to rise but have since retreated. Market sentiment appears to be improving, with markets believing the Fed will remain dovish at its September meeting.
Dovish sentiment provided support for gold prices as investors sought value alternatives. This caused the dollar to weaken.
CME Group’s FedWatch tool suggests the Fed is likely to keep interest rates in a range of 5.25%-5.50% at its September meeting. This suggests that market participants are increasingly expecting the Fed to take a more dovish stance in the short term.
While the likelihood of a rate hike in September has diminished, there is still a 40% chance that the Fed will raise interest rates by 25 basis points in November. This suggests market sentiment is increasingly leaning towards the Fed adopting monetary tightening later this year, possibly in November. Investors turned cautious on the possibility of such a move as they assessed the changing economic situation and the Fed’s statement.
While a rate hike may not be imminent in September, investors expect such action to be possible in the near future, likely in November or beyond. This reflects continued uncertainty about the Fed’s policy decisions and changing expectations.
The U.S. dollar index, which measures the greenback’s value against a basket of currencies, gave back some gains. Spot prices moved lower to around 104.60. This suggests the dollar may be facing some selling pressure or correction after its recent gains.
Market participants are currently focused on U.S. core PPI data and August retail sales data.
These economic indicators will provide valuable information on U.S. economic activity and may influence trading decisions and market sentiment, particularly sentiment for the U.S. dollar.
