Gold reached a peak not seen in over two months on Thursday, as subdued U.S. consumer inflation dampened anticipations of a forthcoming Federal Reserve rate increase, while markets looked forward to producer price data for additional indications of easing price pressures. Spot gold increased by 0.6% to $4,433.62 per ounce by 0108, following a rise of approximately 1% to reach its peak since June 5 earlier. U.S. gold futures for December delivery also saw a 0.6% gain, reaching $4,493.

Fed policymakers are expected to experience minimal new pressure to increase interest rates next month following data released on Wednesday indicating that inflation has moderated on a year-over-year basis for the second consecutive month. However, they may find scant reassurance that current monetary policy is sufficiently restrictive to sustain the ongoing easing trend. The Consumer Price Index increased by 3.4% in the 12 months ending in July, a slight decrease from the 3.5% recorded in June, as reported by the Bureau of Labour Statistics, aligning with the forecasts of economists.

Traders are currently assigning a 40% probability to an interest rate increase at the Federal Reserve’s September meeting, a decrease from the approximately 54% observed the previous week, as indicated by the CME FedWatch Tool. Expectations of lower rates tend to bolster gold by reducing the opportunity cost associated with holding the non-yielding asset. Attention now shifts to the Producer Price Index, due later in the day, for confirmation that price pressures are moderating.

The CPI print for July failed to reflect the latest surge in oil prices, as assaults on vessels in the Middle East persisted and negotiations to resolve the Iran conflict reached a standstill. In other metals, spot silver increased approximately 1% to $65.91 per ounce, reaching its highest level since June 22 in the prior session. Platinum increased by 0.3%, reaching a price of $1,762.70, whereas palladium saw a rise of 0.1%, settling at $1,371.20.