Gold rises slightly amid focus on inflation and US interest rate trajectory

Gold rose 0.3 percent in spot trading to $4,147.77 per ounce by 00:43 GMT, after hitting a two-month low on Wednesday.

Alberto Musalem, president of the Federal Reserve Bank of St. Louis, said the Federal Reserve would need to raise interest rates again to bring inflation back to its 2 percent target, but he refrained from specifying what policymakers should do at their meeting later this month.

According to the CME’s FedWatch tool, traders are pricing in an 18 percent probability of a U.S. rate hike in October and an 81 percent probability of a hike in December.

Although gold is typically viewed as a hedge against rising inflation, higher interest rates reduce the appeal of this non-yielding asset.

In other precious metals, spot silver rose 0.5 percent to $59.62, platinum gained 1.4 percent to $1,656.30, and palladium increased 1.1 percent to $1,135.25. However, all three metals are on track to record weekly losses.