FX.co ★ Gold Holds Gains on Soft US Inflation

Gold traded near $4,050 an ounce on Wednesday, holding on to gains of more than 1% from the previous session after softer-than-expected US inflation data led traders to scale back expectations for further Federal Reserve interest rate hikes. The annual US inflation rate slowed to 3.5% in June from 4.2% in May, below the consensus forecast of 3.8%, as lower oil prices helped ease energy-related inflation. Consumer prices also declined 0.4% from the previous month, marking the first monthly drop since 2020. Meanwhile, Fed Chair Kevin Warsh, in congressional testimony on Tuesday, reaffirmed the central bank’s commitment to restoring price stability but stopped short of signaling a more aggressive policy stance. Markets continue to price in roughly a 50% probability of a Fed rate increase in September, as renewed tensions between the US and Iran have pushed oil prices higher and kept inflation concerns firmly in focus for investors.