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Gold returns lower on stronger dollar, inflation data
AI Summary
- Gold prices fell due to a stronger US dollar and better-than-expected US economic data, including a rise in the Producer Price Index and a drop in initial jobless claims
- Investors predict a 99% probability of a 25 basis point interest rate cut by the Federal Reserve in September, with additional cuts expected in October and December
- The US dollar index rose to 98.2 points, while spot gold fell 0.8% to $1,381.1 an ounce in commodities trading
Gold prices fell during Thursday’s trading amid a stronger US dollar against most major currencies and the release of US economic data that exceeded expectations.
Government data showed that the US Producer Price Index rose by 0.9% month-on-month in July, well above analysts’ expectations of 0.2%.
Initial jobless claims fell by 3,000 to 224,000 in the week ending August 9, compared to expectations for a rise to 228,000. This was the first drop in three weeks, signaling continued labor market resilience.
Earlier this week, similar US data showed that the annual pace of consumer price inflation remained steady at 2.7% in July, below forecasts for an increase to 2.8%.
Core inflation — which excludes volatile food and energy prices — rose to 3.1% in July, above expectations for a 3% reading and compared with 2.9% in June.
According to the FedWatch tool, investors see a 99% probability that the Federal Reserve will cut interest rates by 25 basis points in September, compared with 94% yesterday and 57% a month ago. Analysts also estimate a 61% probability of another 25 basis point cut in October, up from 34% a month ago, as well as a 51% probability of a similar cut in December, compared with 25% a month earlier.
Meanwhile, the US dollar index rose 0.4% to 98.2 points at 18:08 GMT, after reaching a high of 98.3 points and a low of 97.6 points.
In commodities trading, spot gold fell 0.8% to $3,381.1 an ounce at 18:09 GMT.
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