CSC Financial said in a research note that US August CPI was broadly in line
with consensus while core CPI surprised higher; the rise appears driven by
one-off service volatility and is unlikely to persist. After the print, markets
raised the probability of a September Fed hike to 87%, leaving near-term
tightening largely priced and triggering a sell-the-news move that pushed gold
down then back up. The firm expects that unless the Fed signals sustained hikes,
the policy headwind for gold is exhausted and the metal should bottom and
rebound: a September hike would be a priced-in outcome; a pause would relieve
short-term rate pressure and, combined with gold’s role as a credit hedge,
support a recovery.
