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Gold falls as US PPI strengthens Fed rate-hike expectations
August US PPI rose 0.4% month over month, pushing core producer inflation to 4.6% year over year and helping lift the dollar and 10-year Treasury yields.
Gold extended its decline during US trading on Thursday, pressured by a rebound in the US dollar and higher Treasury yields alongside renewed expectations for Federal Reserve rate hikes, according to FXStreet.
The drop came as traders digested the latest US Producer Price Index data. US PPI increased 0.4% month over month in August, matching expectations and accelerating from July’s 0.1% gain, while annual producer inflation rose to 5.4% from 4.8%. Core PPI, excluding food and energy, rose 0.2% month over month versus a 0.3% forecast, and increased to 4.6% year over year from 4.3%.
The report kept the possibility of a Fed hike in play, FXStreet said, even as most economists surveyed by Reuters expected rates to stay unchanged through the end of the year. The CME FedWatch Tool showed traders pricing in about a 64% probability of a rate hike next week.
As yields firmed, the US Dollar Index recovered, FXStreet reported, trading around 98.10 after an intraday low of 98.71. The benchmark 10-year Treasury yield was around 4.92%, its highest since November 2023, while gold’s technical levels showed it held above the 50-day and 100-day moving averages but remained below the 200-day line near $4,538.
Latest closeGold $4,445.30 ▲1.2%|Dollar index 98.78 ▼0.1%