Gold dives as US PPI surges, cutting into Fed dovish bets
Gold Price takes a hit and dives over 0.60% on Thursday following a red-hot factory gate inflation report in the United States (US), which prompted investors to price out the chances for a 50-basis-point rate cut at the Federal Reserve’s (Fed) upcoming meeting. The XAU/USD trades at $3,334 at the time of writing.
The US Producer Price Index's (PPI) July figure from the Bureau of Labor Statistics (BLS) crushed estimates and June’s print. Core PPI soared and was shy of touching 4% amid an environment in which the White House demands lower interest rates, saying that tariffs are not inflation-prone.
Other data revealed that the labor market, which showed signs of weakness, remains strong, as the number of Americans filing for unemployment benefits dipped below forecasts and the prior week’s report.
After the data, traders discounted a 50-basis-point (bps) rate cut by the Fed. Instead, they had priced in a 25 bps cut, with a slim chance that Powell and his colleagues would hold rates unchanged.
In the meantime, the St. Louis Fed President Alberto Musalem, one of the most hawkish members at the Federal Open Market Committee (FOMC), said that inflation is running close to 3%, with tariffs feeding through inflation.
Ahead this week, the US economic schedule will feature additional Fed speeches, Retail Sales for July, and the University of Michigan (UoM) Consumer Sentiment for August.
Source: FXstreet
