Gold steady as traders assess US economic data, inflation pressures

Gold is doing what gold does best during uncertain times: sitting tight and looking smug. Spot prices settled near $4,379 on August 16, hovering in a tight $4,350 to $4,400 range as traders digested the latest batch of US inflation data and tried to figure out what the Federal Reserve plans to do next. The answer, increasingly, appears to be “not much.” July’s Consumer Price Index came in at 3.4% year-over-year, a slight tick down from June’s 3.5% reading, while core inflation held at 2.5%. Neither number screamed emergency, and markets responded by dialing back expectations of a September rate hike from the Fed. The CPI effect on gold’s positioning The July CPI report, released on August 12, functioned as a mild sedative for rate hawks. Annual headline inflation dipping from 3.5% to 3.4% isn’t exactly a victory lap for the Fed’s inflation-fighting campaign, but it does suggest the worst pricing pressures have eased enough to warrant a pause. The Producer Price Index added another data point to the “things are cooling” narrative. PPI was flat in July, with goods prices actually declining while services costs ticked higher. Before this week’s consolidation, gold had been on a tear. ...