Gold volatile on snap revisions to interest-rate outlook

Gold shot higher in the minutes following the release of US Consumer Price Index (CPI) data for May on Wednesday. 

Headline CPI showed prices steadied month-over-month in May from the 0.3% increase in April, and edged up by 3.3% year-over-year compared to 3.4% previously. The readings were below economists's expectations of 0.1% MoM and 3.4% YoY.

CPI ex Food & Energy showed prices rose 0.2% MoM from 0.3% in April and 3.4% YoY from 3.6% previously. This was also below expectations of 0.3% and 3.5%, respectively. 

The cooler-than-expected CPI data led to a sell-off in the US Dollar (USD) which is negatively correlated to Gold.

Gold price itself rose over half a percent to a peak of $2,342 after the release. Lower inflation suggests interest rates are more likely to fall, which in turn reduces the opportunity cost of holding Gold, making it more attractive to investors. 

The data provided a counterweight to US Nonfarm Payrolls (NFP) data on Friday, which reflected a buoyant labor market and rising wages in the US. These were expected to put upside pressure on inflation.