Gold slips 0.9% as US yields spike near 4.93%
The precious metal lost value as the 10-year Treasury yield approached 4.93% following strong inflation data.
Gold prices fell by 0.90% on Thursday. The metal traded at $4,360 per ounce. This decline followed the release of US Producer Price Index data. Investors increased bets on a Federal Reserve rate hike.
The US 10-year Treasury yield rose to 4.93%. This level is the highest in several months. Rising yields make gold less attractive compared to bond investments. The dollar also strengthened against major currencies.
Inflation data drives hawkish market expectations
August PPI showed a 5.4% annual increase. This figure exceeded the expected 5.3% rate. Core PPI rose by 0.2% month over month. Traders interpret these numbers as signs of persistent inflation.
Money markets now price in a 70% chance of a 25 basis point hike. This probability rose after the data release. The next Federal Reserve meeting is scheduled for next week. Analysts expect the central bank to maintain a tight policy stance.
Crude oil breach pressures financial markets
West Texas Intermediate crude surpassed $100 per barrel. This was the first time since mid-May. Brent crude also crossed the same threshold. High energy costs feed directly into inflation metrics.
The US Dollar Index climbed 0.2% to 98.99. A stronger dollar increases the cost of gold for foreign buyers. This dynamic contributes to the current downward pressure on XAU/USD. Market sentiment shifted toward risk aversion.
Traders await Friday consumer price reports
Attention turns to the Consumer Price Index release on Friday. August CPI is forecast to rise 0.4% month over month. The annual rate is expected to hold at 3.4%. Core CPI is estimated to slow to 2.4% year over year.
The University of Michigan Consumer Sentiment index will also be released. This data point provides insight into household economic outlooks. According to GN auto markets and commodities reports, these figures are critical for forecasting Fed actions. The outcome will determine if a September hike becomes inevitable.
