Gold Prices Rally Amid Weak Chinese Inflation Data and Powell's Dovish Testimony

Gold prices continued to rally on Wednesday, nearing last Friday's six-week highs following weak Chinese inflation data. Despite a new order for civilians to leave Gaza City, Hamas-Israel ceasefire talks persisted. Global stock and bond markets also gained after Federal Reserve Chairman Jerome Powell gave 'dovish' testimony to the US Congress.

Powell, expected to maintain dollar interest rates at a two-decade high this month, said on Tuesday that the economy has made considerable progress toward the 2% inflation goal. He cautioned that delaying or insufficiently reducing policy restraint could weaken economic activity and employment.

Market bets against a Fed rate cut in September fell to their lowest in three months, with odds at 1-in-5, down from even odds in late May, according to the CME's FedWatch tool. Gold prices rose to $2386 per ounce, regaining 1.5% from earlier in the week and just 0.4% below Friday's peak, before edging back $10, staying within its three-month trading range.