Gold prices rose Tuesday, rebounding from a two-week low. Markets reacted to the latest U.S. inflation data.
A sharp drop in the Consumer Price Index (CPI) for June drove the rally. The CPI posted its largest monthly decline since April 2020.
The cooler-than-expected inflation report led to speculation about Federal Reserve flexibility on future interest rate hikes. This sentiment weighed on U.S. Treasury yields. It also weighed on the dollar. This increased the appeal of non-yielding assets like gold. Gold jumped significantly in its initial reaction to the economic data.