Gold fell after the release of the critical US CPI report on Wednesday.

The gold price (XAUUSD) builds on an overnight moderate comeback from the psychological level of $2,500 and gets some positive traction during Thursday’s Asian session. However, the commodity remains below its all-time high as the Federal Reserve’s (Fed) chances of more aggressive policy easing dwindle.

The US bond yields and the USD rise as the prospects of a 50-bps rate drop in September fall.

This results in a small increase in US Treasury bond yields and brings the US Dollar (USD) closer to The monthly peak serves as a headwind for the non-yielding yellow metal.

Aside from that, the risk-on attitude may erode demand for traditional safe-haven assets, limiting any major appreciation in the gold price. Furthermore, the recent range-bound price action indicates uncertainty about the commodity’s near-term outlook, warranting some caution from bullish traders. This makes it smart to wait for robust follow-through buying before resuming a well-established rally from the sub-$2,300 levels seen in late July.

Daily Market Movers: Gold price bulls lack conviction with rising US bond rates and moderate USD gains.

The gold price plummeted on Wednesday as the critical US Consumer Price Index (CPI) report pushed investors to lower their expectations of The Federal Reserve plans to decrease interest rates by 50 basis points next week.
According to the US Bureau of Labor Statistics, the headline CPI increased 0.2% in August, however the annual rate fell more than expected, from 2.9% to 2.5%, the weakest increase since February 2021.

CPI, which excludes volatile food and energy prices, climbed 0.3% in the reporting month and 3.2%.

Meanwhile, the core CPI, which excludes volatile food and energy prices, climbed 0.3% in the reporting month and 3.2% in the year to August, matching July’s increase and market expectations.
According to the CME Group’s FedWatch tool, the markets are now pricing in an 87% chance of a 25 basis point rate drop at the next FOMC policy meeting on September 17-18, compared to 71% before the US CPI data.
decreasing probabilities for a more aggressive The US central bank’s policy easing pushes US Treasury bond yields and the US Dollar higher, which expected to operate as a headwind for the non yielding yellow metal.
Traders are now looking forward to the release of the US Producer Price Index (PPI) for some momentum. Though market reaction is expected to be modest given the probability of the Fed’s rate-cutting cycle beginning soon.