3-Week High After US CPI Undershoot

Gold is +0.2% in the Asia-Pac session, after rising to the highest in three weeks following lower-than-expected US inflation data. The CPI report fuelled speculation that the forthcoming 25bp hike from the Federal Reserve would be the final one. The market places the chance of a July Fed hike at 90%, but the odds of further hikes softened. November cumulative tightening eased to 30bp from 35bp.

• US headline inflation declined from 4% to 3% in June, marking the slowest rate of inflation since March 2021. The market expected 3.1%. Core inflation also fell short of expectations, printing 4.8%. The decrease was primarily driven by softer airfare, hotel costs, and a decline in used vehicle prices. Notably, prices for core services ex-rent experienced a modest annualized growth rate of 2.9% during the three months leading up to June.
• The dollar and US tsy yields dropped following the report, boosting bullion, which closed 1.3% higher.