GOLD - Prices fell as US consumer price data accelerated

World gold prices fell slightly yesterday as data showed US consumer prices rising rapidly, with expectations that the inflation index may not prompt a major change in the Fed's interest rate strategy. Department of Labor data showed that headline and core CPI in August increased 0.6% and 0.3%, respectively, from the previous month. Economists expected increases of 0.6% and 0.2%, respectively.

However, traders' expectations that the Fed will keep interest rates unchanged at its September 19-20 policy meeting only became stronger after this data. At the same time, the CME FedWatch tool prices a roughly 44% chance of another Fed rate hike before 2024. Precious metals investors are less worried about higher inflation and more focused on spending opportunity costs associated with holding non-interest bearing assets in a rising interest rate environment.