Aug 13 (Reuters) – Gold fell more than 1% on Thursday as investors locked in gains after prices climbed to two-month highs following U.S. inflation data that was in line with expectations, tempering expectations for a Federal Reserve rate hike next month.
Spot gold fell 1.2% to $4,354.58 per ounce by 12:58 a.m EDT (1658 GMT). Prices touched their highest level since June 5 earlier in the session at $4,449.39.
U.S. gold futures dipped 1.1% to settle at $4,420.40.
“4,500 is a big resistance point for gold. We touched it twice and gold tumbled from that point, with traders being jittery close to the 4,500-level at the moment,” said Bob Haberkorn, senior market strategist at StoneX.
The U.S. Producer Price Index was unchanged in July as a decline in goods prices offset a rise in services costs, indicating that inflationary pressures may persist.
The data followed Wednesday’s consumer price report, which showed U.S. inflation rose 3.4% in the 12 months through July, down from 3.5% in June and in line with economists’ expectations.
Markets are now pricing a 35% chance of a rate hike at the September meeting, down from 40% immediately after the PPI data, according to the CME FedWatch Tool. [FEDWATCH]
Fed policymakers are unlikely to feel the urgency to raise rates next month after inflation cooled for a second consecutive month.
On Wednesday, however, Cleveland Fed President Beth Hammack reiteratedthe need to raise rates “right now”.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
“(Gold) had a pretty solid 9% bump in a week behind Chinese and retail buying; seeing some profit-taking around 100 day moving average,” independent analyst Tai Wong said.
Meanwhile, oil prices declined on Thursday as investors assessed prospects for weaker global demand this year amid supply disruptions.
Separately, Bank of Korea held a $250 million stake in U.S.-listed gold ETF as of end of June, an SEC filing showed.
Among other metals, spot silver slid 1.2% to $64.51 per ounce, platinum dropped 2.4% to $1,715.54, and palladium slipped 3.9% to $1,316.28.
(Reporting by Sukanya Mitra and Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Diti Pujara)
