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Gold Slips 1% As Large Rate-Cut Hopes Dim After U.S. CPI Data

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Gold prices fell 1% on Wednesday after data showed U.S. consumer prices rebounded as expected in July, dampening hopes for a sizeable rate cut from the Federal Reserve next month.

Spot gold fell about 1% to $2,440.62 per ounce by 1637 GMT. U.S. gold futures slipped 1.2% to $2,478.80.

The U.S. consumer price index increased 0.2% last month, after falling 0.1% in June, the Labor Department’s Bureau of Labor Statistics said. In the 12 months through July, the CPI increased 2.9%, after advancing 3% in June.

Markets now see a 41% chance of a 50 basis point rate cut by the Fed in September versus 50% prior to the release of U.S. CPI data, according to the CME FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.

Non-yielding gold has risen 19% so far this year after spot prices touched a record high of $2,483.60 on July 17, owing to firm safe-haven demand and Fed rate-cut expectations.

Elsewhere, spot silver fell 2.2% to $27.23, platinum dipped 1.6% to $921.27, and palladium was down 1.7% at $922.25.

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