Gold futures settled higher on Wednesday as the dollar slid after data showed U.S. consumer price inflation for the month of July came in flat, raising speculation that the Federal Reserve will be less aggressive with its policy at the upcoming meeting in September.
The dollar index dropped to a low of 104.64 and despite recovering to 105.02, remains deep down in negative territory with a loss of about 1.25%.
Gold futures for December ended higher by $1.40 or about 0.1% at $1,813.70 an ounce.
Silver futures for September closed higher by $0.260 or about 1.2% at $20.742 an ounce, while Copper futures for September settled at $3.6495 per pound, gaining $0.0640 or about 1.2%.
Data from the Labor Department said the consumer price index was unchanged in July after jumping by 1.3% a month earlier. Economists had expected prices to edge up by 0.2%.
The data also said core consumer prices, excluding food and energy prices, rose by 0.3% in July, as against expectations for a 0.5% increase. The annual rate of core consumer price growth was unchanged at 5.9%, while economists had expected an acceleration to 6.1%.
The tamer than expected inflation data has led to speculation that the Federal Reserve will slow the pace of interest rate hikes at its September meeting.
CME Group's FedWatch tool is currently indicating a 58.5% chance of a 50 basis point rate hike and a 41.5% chance of a 75 basis point rate hike.
