Gold drops 1.2% as US inflation data lifts rate hike odds
Spot gold fell 1.2% to $4,349.32 per ounce on Thursday. US producer price data and rising oil costs drove the decline. Market expectations for a Federal Reserve rate hike increased sharply.
International gold prices retreated on Thursday following the release of US economic data. Spot gold declined 1.2% to reach $4,349.32 per ounce. US gold futures dropped 1.6% to settle at $4,391.30. The move reflected a broader risk-off sentiment in precious metals markets.
US producer prices rose in August as expected. The increase was driven by a rebound in energy costs. Analysts noted that the data signaled persistent inflationary pressures. This development strengthened the case for tighter monetary policy from the Federal Reserve.
Rate hike probability climbs to 70%
Traders adjusted their positions based on the new inflation signals. The likelihood of a Fed rate hike next week rose to 70%. This figure is up from 62% before the data release. The CME FedWatch Tool tracks these market expectations in real time.
A stronger US dollar made gold more expensive for foreign buyers. Higher yields on 10-year US Treasury bonds also pressured bullion prices. Rising yields increase the opportunity cost of holding non-yielding assets. These factors combined to weigh on gold demand.
Precious metals broadly decline
Silver and platinum also fell during the session. Spot silver dropped 4.2% to $64.47 per ounce. Platinum declined 4.9% to reach $1,802.48. Palladium prices fell 4.3% to settle at $1,295.23. The sector-wide drop indicates broadened risk aversion.
Domestic prices show mixed trends
Indian domestic markets reacted differently to global cues. Gold prices in New Delhi rose by 600 rupees to 158,600 rupees per 10 grams. This marked a rebound after three consecutive sessions of losses. Retailers and stockists increased their buying activity during the day.
Silver prices in India continued their upward trend. The metal climbed 1,200 rupees to 244,600 rupees per kilogram. This extended its rally for a third straight session. The divergence highlights local demand dynamics offsetting global price pressures.
