Gold Falls, Hot US PPI Lifts Yields
Gold prices weakened on Wednesday after the latest US data showed a resurgence in inflation at the producer level, bolstering speculation that the Federal Reserve will keep interest rates higher for longer. Bullion briefly fell as much as 1% as the market adjusted to expectations of more aggressive policy.
The US producer price index (PPI) rose 6% year-on-year, beating all estimates in a Bloomberg survey of economists. The monthly increase was also the sharpest since 2022. The core measure, which excludes food and energy, rose 5.2% from April 2025, the largest increase in more than three years, amid Middle East conflicts that have driven up the cost of transporting goods.
Correspondingly, the 10-year US Treasury yield rose to near its highest level since July, while the Bloomberg Dollar Spot Index rose 0.1%. The combination of yields and a higher dollar put pressure on gold, as the precious metal offers no yield.
Despite the ongoing correction, gold remains within a tight range after falling sharply at the start of the Iran war, when the market fluctuated between inflation risks that curbed the possibility of easing and growth concerns that could ultimately lead to more accommodative policy. Meanwhile, India raised import tariffs on gold and silver to around 15% from 6%, a move it said was intended to protect its currency and strengthen foreign exchange reserves.
At 11:30 a.m. New York time, spot gold fell 0.6% to US$4,688.16 per ounce. Silver rose 2.1% to US$88.24 and has gained 19% so far in May, with the market reportedly supported by buying in China, including steady buying activity on the Shanghai Futures Exchange, according to TD Securities. Platinum and palladium both strengthened.
The market is now monitoring the direction of wholesale inflation and its transmission to consumer inflation, movements in Treasury yields and the dollar, and the impact of the Middle East conflict on energy and logistics costs, which could potentially keep price pressures high. (gn)*
Source: Newsmaker.id
