Gold rose about 1% on Wednesday after July's consumer price index matched forecasts, pushing traders to pare bets on a September Fed rate hike. Gains stayed capped by unresolved tension over the Strait of Hormuz, while China's central bank kept adding to its reserves.
Gold climbed on Wednesday after an in-line July inflation report gave the Federal Reserve more room to hold interest rates steady rather than raise them, with uncertainty over a Middle East peace deal keeping a lid on the advance. Spot gold gained 1.1% to $4,416.15 an ounce, while gold futures rose 0.8% to $4,476.35, as of 15:12 ET on Wednesday.
Cooling inflation eases the rate path
Headline CPI ticked up 0.1% month over month in July, after falling 0.4% in June, and cooled to 3.4% year over year from 3.5%. Core CPI, which strips out food and energy, increased 0.2% month over month following a flat June reading and slowed to 2.5% year over year from 2.6%. All four measures matched expectations.
The report follows a weaker-than-expected July jobs print on Friday that had already pushed traders to recalibrate September rate-hike odds. As a result, the CME FedWatch tool showed the odds of the Fed holding rates steady in September rising to 60% after the CPI release, up from 54% beforehand. Higher-rate environments tend to weigh on non-yielding assets such as gold, so a steadier rate outlook works in bullion's favor.
Hormuz standoff still caps the advance
Elsewhere, Brent crude briefly touched $90 a barrel as mixed messaging over the Strait of Hormuz kept oil markets on edge. There appeared to be little progress toward a peace deal to reopen the waterway, with the U.S. and Iran both continuing to claim control over it. According to Trump on his Truth Social service: "The U.S.A. has total control over the Strait of Hormuz." Iran's state media, however, reiterated that the strait won't reopen until Washington changes course and lifts frozen assets.
China keeps buying as gold flashes overbought
The People's Bank of China added about 640,000 troy ounces to its gold reserves in July, a 21st consecutive month of increases, taking its total to 76.08 million ounces. That steady official buying comes as gold's near-term chart flashes caution: the metal's RSI stood at 71.8, deep in overbought territory, even as price held above all major moving averages.
IG senior market analyst Tony Sycamore said gold faces downtrend resistance around $4,460, drawn from the late-January record high near $5,602, with the 200-day moving average near $4,495 reinforcing that ceiling. He added that bullion needs a sustained break above both levels to open the way toward $5,000.
Sources: Commodities & Futures News, Commodities & Futures News
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