Gold Price News: Gold Rallies on Slowing US Inflation, Weaker Dollar

Gold prices rallied on Thursday, taking support from US inflation data which strengthened the case for interest rate cuts this year.

Prices pushed higher to $2,420 an ounce on Thursday, within striking distance of the all-time highs of just over $2,450 an ounce seen in late May. That compared with around $2,373 an ounce in late trades on Wednesday.

The catalyst for the latest gains was the release of data on Thursday which showed that US inflation came in below the market’s expectations in June, on a month-on-month and year-on-year basis. With inflation figures inching nearer to the US Fed’s target, this bolsters the argument for looser monetary policy before the end of the year – a bullish factor for precious metals prices.

The latest figures from interest rate traders indicate an implied probability of over 94% for a rate cut at the US Fed’s September 18 meeting, according to the CME FedWatch tool: CME FedWatch – CME Group. This was up over 10 percentage points in the last few days, indicating a strengthening of market expectations of imminent rate cuts.

The US dollar reacted to the inflation figures by falling against other major currencies on Thursday, making dollar-denominated gold cheaper for buyers in other currencies, boosting demand.

The markets will be looking ahead to the release of US producer price inflation figures for June on Friday, for further signals on the economy, as well as the Michigan consumer sentiment figures for July. Beyond that, Monday will see Chinese GDP growth rates for Q2 as well as industrial production figures for June.