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Gold rises above $4,050 as US producer inflation cools

US PPI fell to 5.5% year over year in June, beating expectations and shifting pricing toward rates being held at the Fed’s July meeting.

Reported · Written up by our desk · Major Pairs

Gold edged higher above $4,050, trading around $4,060 in early Asian hours as US producer inflation came in softer than expected, lifting demand for the metal. FXStreet said the move reflects renewed hopes that the Federal Reserve can keep interest rates steady at its upcoming July policy meeting.

The US Bureau of Labor Statistics reported that the Producer Price Index declined to 5.5% year over year in June from 6.0% in May, with the June figure below the market expectation of 6.2%. On a monthly basis, PPI fell 0.3% after May’s 0.6% increase, which had been revised higher.

According to the CME FedWatch Tool cited by FXStreet, traders saw about a 10.2% probability of a Fed rate hike at the July meeting, down from 16.6% before the data. FXStreet also noted earlier that consumer inflation had slowed more than expected in June, adding to the shift in sentiment.

Still, the article warned that rising geopolitical risk tied to US-Iran hostilities and airstrikes around the Strait of Hormuz has pushed crude oil higher, which could keep central banks from cutting rates quickly. That backdrop can weigh on gold’s appeal as a non-yielding asset, the outlet said.

Latest closeGold $4,067.10 ▲0.1%|WTI crude $80.18 ▲1.1%

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