Gold Prices Slip From Two-Month High as Inflation and Fed Outlook Drive Markets

Gold prices moved lower on Thursday after pulling back from a fresh two-month high, as investors assessed softer U.S. inflation data alongside persistent energy risks and uncertainty over the Federal Reserve’s interest rate outlook.

Spot gold fell 0.5% to around $4,388 an ounce in early trading, while gold futures dropped by a similar margin to about $4,446. Silver declined 0.4% to $65.08 an ounce, while platinum slipped 0.6% to roughly $1,747.

Gold had climbed as high as $4,450 on Wednesday, gaining about 0.9% and reaching its strongest level in more than two months. The rally followed U.S. consumer price data showing inflation increased just 0.1% month over month in July, in line with expectations.

The softer CPI report eased concerns that rising energy costs linked to the U.S.-Iran conflict were immediately fueling broader inflation. It also reduced expectations of another Fed rate hike, with markets pricing roughly a 38%-40% chance of a September increase, compared with 46% before the inflation report.

The Federal Reserve kept interest rates unchanged at 3.50%-3.75% in July, although three policymakers supported an increase. Investors are now awaiting U.S. producer price inflation data and additional economic indicators for clues about the Fed’s next move.

Geopolitical risks continue to support safe-haven demand for gold. Restrictions around the Strait of Hormuz and uncertainty surrounding U.S.-Iran negotiations have kept oil prices elevated, raising concerns that higher energy costs could eventually increase inflationary pressures.

Meanwhile, the U.S. Dollar Index remained broadly steady near 99.96, providing limited direction for bullion. Gold has also received support from Chinese demand, including continued purchases by the People’s Bank of China.

From a technical perspective, gold recently moved above its 100-day moving average for the first time since April. However, resistance near $4,450 and the 200-day moving average around $4,499 could limit further gains in the near term.