Gold prices traded slightly higher during Asian trading on Friday, with market participants turning their focus towards United States consumer price index (CPI) data after the latest producer price index (PPI) reading came in as expected.
By 4:30 pm AEST (6:30 am GMT), spot gold prices were up 0.7% at US$4,347.94 an ounce.
The CPI data is the last major inflation release before the Federal Reserve’s (Fed) 15-16 September monetary policy meeting, making it one of the key data points in determining whether the Fed opts for an interest-rate hike or keeps rates unchanged.
Markets increased their bets on a September rate hike to 69.6% after the hotter US PPI reading, from roughly 60% before the data, according to the CME Group FedWatch Tool.
The PPI rose 0.4% last month after an upwardly revised 0.1% gain in July. In the 12 months through August, the PPI advanced 5.4% after rising 4.8% in July.
Inflation concerns were also heightened as oil prices topped $100 for the first time in nearly four months amid the widening conflict in the Middle East.
Gold’s next major move now depends on the US CPI data, with market participants focused on core readings as they provide a clearer picture for the Fed by excluding the war-driven impact on energy prices.
Annual core CPI is expected to rise 2.4% in August, slowing slightly from a 2.5% increase in July.
On a monthly basis, core CPI inflation is expected to hold steady at 0.2% over the same period.
