US consumer prices likely rose in August as gasoline costs rebounded, reinforcing bets that the Federal Reserve will keep raising interest rates. Wall Street is now less worried about a single hike than about a sustained tightening cycle that could cool the market rally and keep gold under pressure.
US consumer prices likely rose 0.4% month over month in August, up from a 0.1% rise in July, according to a Reuters report. The projected increase would push annual inflation to an anticipated 3.4%. Gasoline drove the pickup after two months of declines.
Gasoline rebound pushes prices higher
The average gasoline price reportedly rose to $4.192 per gallon in August from $4.064 in July, making energy costs a significant factor in the inflation reading again. Market pricing also points to an increased probability of crude oil reaching a new all-time high by September 30. Higher energy costs are seen as a potential pressure point for the Fed's policy decisions.
Wall Street fears more than one hike
The bigger worry on Wall Street is not a single interest rate increase but a sustained hiking cycle, according to Bloomberg. Market participants fear continued hikes could dampen the growth trajectory of the S&P 500 and broader risk assets. Data from the CME FedWatch tool shows a 50-60% probability of a quarter-point hike at the Fed's September meeting, though a more extensive tightening cycle has raised alarms that the rally's momentum could stall.
Gold outlook dims as dollar expectations firm
A sustained hiking cycle is also weighing on gold price forecasts, with participants expecting a stronger dollar that typically pressures gold lower. The likelihood of gold reaching $15,000 by the end of December remains low, priced at a 0.7% chance. That pricing is consistent with concerns that tighter policy could strengthen the dollar and reduce gold's appeal as a hedge.
For Wall Street, the size of the hiking cycle, not just the September decision, is now the central question.
Sources: Crypto Briefing, Crypto Briefing
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