The August consumer price index report, due Friday at 8:30 a.m., will be the final inflation data the Federal Reserve receives before deciding on interest rates at next Wednesday's meeting. Economists expect the report to show overall inflation at 3.4% annually and core inflation at 2.4%, with the data potentially determining whether the Fed holds rates or implements a rate hike. The stakes are exceptionally high as market expectations have grown volatile and depend heavily on incoming economic data and energy prices.
The European Central Bank raised its key interest rates by 25 basis points to combat inflation pressures exceeding its 2% target, citing Middle East conflict as a continuing inflationary factor. Gold prices declined modestly in the initial reaction, with spot gold trading down 0.62% in euros and 0.77% in dollars, as analysts suggest the hawkish ECB decision may foreshadow similar action from the Federal Reserve.