Gold Falls as Traders Raise Fed Hike Bets After US Price Report

Gold prices have fallen by as much as 1.7% after the latest US inflation report and surging crude prices reinforced bets that the Federal Reserve will raise interest rates this month. Bullion prices have stayed largely in a range of $4,400 an ounce in recent weeks as traders try to gauge the outlook for Fed policy. The latest producer price data showed price increases were mostly in line with estimates, with swap traders now pricing in a roughly 70% chance of a hike at next week's meeting. Energy prices, particularly Brent crude, have surged above $105 a barrel due to rising tensions in the Middle East, further pressuring interest rate expectations. Analysts at Standard Chartered Plc predict that gold prices will recover in the coming months as the focus shifts to potential de-dollarization and government interventions in the bond market. UBS Group AG strategist Joni Teves notes that a September hike could trigger a knee-jerk correction, but may not derail the broader recovery. Some traders are taking a buy-the-dip approach for gold, with a price range of $4,300-to-$4,500 favored. The US dollar and yields have risen, with the Bloomberg Dollar Spot Index increasing by 0.3%. Spot gold is currently trading at $4,367.92 an ounce, down 0.7%, while silver has fallen by 4% to $64.53 an ounce.