NEW YORK: Gold climbed over 2% on Tuesday to its highest levels in more than five months after data showing a smaller-than-expected rise in US consumer prices cemented bets for a slowdown in rate hikes from the Federal Reserve.

Spot gold was up 1.8% at $1,812.37 per ounce, as of 1646 GMT. Earlier in the session, bullion hit its highest level since June 30. US gold futures advanced 1.9% to $1,826.40.

Gold prices are up significantly on the outlook that rate hikes may be slowing, said Bob Haberkorn, senior market strategist at RJO Futures.

The inflation print “signals to the market that the interest rate hikes that the Fed’s been doing are working and they might not need to be as aggressive this week or in the coming months,” Haberkorn added.

U.S consumer prices barely rose in November amid a drop in the cost of gasoline and used cars, leading to the smallest annual increase in inflation in nearly a year.

Following the release of the CPI data, the dollar index dropped more than 1% to a nearly six-month low, making gold less expensive for other currency holders. Benchmark US Treasury 10-year note yields also slipped.

Fed funds futures prices now imply a better-than-ever chance that the Fed will follow its expected half-point interest rate hike this week with a smaller 25-basis-point rate hike in February.