Gold prices fell 1% on Wednesday after data showed U.S. consumer prices rebounded as expected in July, pouring water on expectations for a sizeable rate cut from the Federal Reserve next month.

Spot gold fell 1% to $2,440.47 per ounce by 01:45 p.m. EDT (1745 GMT). U.S. gold futures settled 1.1% lower at $2,479.70.

The U.S. consumer price index increased 0.2% last month, after falling 0.1% in June, the Labor Department's Bureau of Labor Statistics said. In the 12 months through July, the CPI increased 2.9%, after advancing 3% in June.

Markets now see a 36% chance of a 50-basis point rate cut by the Fed in September versus that of 50% prior to the release of U.S. CPI data, according to the CME FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.

Source : Reuters