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Gold slips after Iran escalation offsets softer US PPI data
XAU/USD was last around $4,034, down 0.5%, after US PPI eased to 5.5% year-on-year while energy price pressure rose on Middle East developments.
Gold prices turned lower Wednesday as US inflation data that had eased expectations for Federal Reserve tightening was overshadowed by renewed risk-driven pressure tied to the US-Iran conflict, according to FXStreet. At last check, XAU/USD traded near $4,034, down about 0.5%.
FXStreet said US Producer Price Index inflation fell from 6.0% to 5.5% year-on-year, below the 6.2% estimate, while core PPI rose from 4.6% to 4.7% year-on-year, still under forecasts of 5.2%. The outlet added that the easing in inflation read-through helped reduce market expectations for a Fed hike late in the year, with those expectations cut to about 22 basis points from at least 35 basis points before CPI.
The newswire also tied the gold pullback to geopolitics driving higher energy prices, which it said can support the US dollar through expectations of higher rates, a headwind for bullion. It noted the US has reimposed a blockade on Iran, while Iran threatened to shut off more regional energy exports.
Looking ahead, FXStreet pointed to the upcoming US data calendar including Initial Jobless Claims and Retail Sales for June, along with additional Fed speakers.
The outlet also cited comments from Fed Chair Kevin Warsh, who attributed part of price increases to AI, and New York Fed President John Williams, who said there is no clear interest-rate path and that the Middle East conflict poses significant risks that the US economy has so far absorbed.
Latest closeGold $4,058.20 ▲1.5%