Gold subdued as hot US data lifts dollar, yields; cools hopes for jumbo Fed cut
Spot gold fell 0.1% to $3,352.65 per ounce as of 9:15 a.m. ET (1315 GMT). U.S. gold futures for December delivery were down 0.2% to $3,400.60.
The dollar index gained 0.2% from an over two-week low, making bullion less attractive for non-U.S. buyers, while benchmark 10-year yields edged up from a one-week low.
Stronger U.S. wholesale price data tempered bets on a larger, half-point cut next month. Traders are now leaning toward a quarter-point move with another in October, reinforcing comments from Fed's Mary Daly that such a large cut is not needed.
The Labor Department reported the producer price index rose 3.3% year-on-year in July, beating forecasts of 2.5%. Weekly jobless claims also came in lower than expected, at 224,000 versus 228,000 forecast.
"Gold trades lower as the stronger than expected U.S. PPI print may lower rate cut hopes (expectations) as they feed into a higher Core PCE inflation print for July as well, likely keeping the Federal Reserve cautious on rate cuts," said Saxo Bank's head of commodity strategy, Ole Hansen.
"Overall, the print does not alter our bullish view on gold as the Fed eventually will have to choose between fighting inflation or supporting the economy."
Gold, a traditional refuge in times of economic or geopolitical strain, tends to benefit from low interest rates.
Investors also kept an eye on geopolitical risks. U.S. President Donald Trump warned of "severe consequences" if Russian President Vladimir Putin rejects a Ukraine peace proposal at their upcoming summit, hinting at a subsequent meeting with Ukraine's leader.
Elsewhere, spot silver lost 1% to $38.11 per ounce, platinum gained 1% to $1,352.60 and palladium rose 1.7% to $1,140.81.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Leroy Leo)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
6 hours ago
- Zawya
Longer-dated yields rise, Fed policy in focus
Longer-dated U.S. Treasury yields rose on Friday as traders evaluated how many times the Federal Reserve could cut rates this year, while increases in European government bond yields also dragged U.S. yields higher. The Fed is seen as being all but certain to cut rates in September as the labor market and other economic indicators point to a slowing economy. So far tariffs have not passed through to consumer price inflation, which boosts the chances of a cut next month. Hotter-than-expected producer price inflation on Thursday, however, tempered expectations that the U.S. central bank will undertake a larger-than-typical 50 basis points move. 'The yield curve keeps steepening. I think that's a function of the Fed rate cuts that are coming in September,' said Tom di Galoma, managing director at Mischler Financial Group. 'I don't think they're going to do 50 in September, I think 25 is probably more logical at this point, just given the fact that Powell seems to be reluctant to go at all.' Fed Chair Jerome Powell has expressed reluctance to cut rates as he anticipates U.S. President Donald Trump's tariff policies will increase inflation this summer. Investors will focus on whether Powell pushes back against market pricing of rate cuts at the U.S. central bank's annual economic policy symposium in Jackson Hole, Wyoming, next week. Yields briefly rose after data on Friday showed U.S. retail sales increased solidly in July, boosted by strong demand for motor vehicles as well as promotions by Amazon and Walmart. The 2-year note yield, which typically moves in step with Fed interest rate expectations, was last down 0.9 basis points on the day at 3.73%. The yield on benchmark U.S. 10-year notes rose 0.9 basis points to 4.302%. The yield curve between two-year and 10-year notes steepened by around 2 basis points to 57.4 basis points, the steepest since July 16. Longer-dated yields are being pulled higher in line with increases in European government debt yields. 'Curves keep steepening there and they just keep selling off,' said di Galoma. German 10-year yields reached 2.78% on Friday, the highest since March 27. German 30-year yields reached 3.354%, the highest since 2011. Analysts at ING said on Friday that implied volatility increases in the very long end of the euro swap curve are likely due to an upcoming Dutch pension transition. 'We are seeing this behaviour in the US where the fiscal deficit is worrying investors, but in the euro space the 30Y swap spread has remained fairly constant the past months. We therefore see the anticipated Dutch pension funds' rotation away from longer-dated swaps as a potential driver behind recent moves,' they said. Traders are also focused on talks to end the Russian war in Ukraine. Trump and Russian President Vladimir Putin meet at a Cold War-era air force base in Alaska on Friday to discuss a ceasefire deal for Ukraine that the U.S. sees as a possible way to end the deadliest war in Europe since World War Two. (Reporting by Karen Brettell in New York; Editing by Nia Williams)
Zawya
6 hours ago
- Zawya
US consumer sentiment weakens in August; inflation expectations rise
U.S. consumer sentiment softened in August as households anticipated higher goods prices because of import tariffs. The University of Michigan's Surveys of Consumers on Friday said its Consumer Sentiment Index dropped to 58.6 this month from a final reading of 61.7 in July. Economists polled by Reuters had forecast the index would increase to 62.0. "This deterioration largely stems from rising worries about inflation," Joanne Hsu, the director of the Surveys of Consumers, said in a statement. "Buying conditions for durables plunged 14%, its lowest reading in a year, on the basis of high prices." Consumers' 12-month inflation expectations increased to 4.9% this month from 4.5% in July. Long-run inflation expectations rose to 3.9% from 3.4% last month. (Reporting by Lucia Mutikani; Editing by Paul Simao)
Zawya
6 hours ago
- Zawya
Dollar slips as data keep September rate cut on table; eyes on Trump-Putin meeting
The dollar eased on Friday as a data-heavy week wound down, keeping the case for a September Federal Reserve interest rate cut intact, while traders awaited talks in Alaska between Donald Trump and Vladimir Putin regarding Ukraine. The dollar, which had jumped on Thursday as data showed U.S. producer prices increased more than expected in July, gave up most of those gains on Friday, and was set to finish the week 0.5% lower against a basket of currencies. "The PPI figure yesterday was a shock, but there is still little concrete evidence for a tariff-driven spike in inflation," Kyle Chapman, forex markets analyst at Ballinger & Co in London, said. "With markets staying firm on their bets for a September cut and the focus now shifting to Alaska, the dollar is handing back its gains this morning," Chapman added. Money markets reflect a 93% chance of a 25-basis-point Fed rate cut in September, according to CME FedWatch. A Fed interest rate cut in September, the first this year, followed perhaps by another before year-end, remains the base forecast for most economists polled by Reuters amid rising concerns about the health of the world's biggest economy. Chicago Federal Reserve Bank President Austan Goolsbee on Friday said the latest reports this week showing a rise in services inflation are a source of "unease" given what he sees as the stagflationary impulse from tariffs on the economy. On Friday, investors were also watching to see if the Trump-Putin summit made any progress towards a ceasefire in Ukraine. "While anything could happen at the meeting between Trump and Putin, I think expectations are low for progress towards a lasting ceasefire and that tilts the risks towards a softer dollar if the market is pleasantly surprised," Ballinger's Chapman said. Most analysts expect Europe's single currency to benefit from any ceasefire deal in Ukraine. The euro was 0.5% higher at $1.1708 versus the dollar. The dollar found little support on Friday from data that showed U.S. import prices rebounded in July, boosted by higher costs for consumer goods. Separately, U.S. retail sales increased solidly in July, boosted by strong demand for motor vehicles as well as promotions by Amazon and Walmart. Markets also await next week's Jackson Hole symposium for clues on the Fed's next move. Signs of weakness in the U.S. labour market combined with any inflation from trade tariffs could present a dilemma for the Fed's rate cut trajectory. "Recession risks remain low, but I think it's wise for the Fed to shift to a more neutral stance and cut rates in coming meetings," Jeffrey Roach, chief economist for LPL Financial, said in a note. Against the yen, the dollar was 0.5% lower at 146.975 yen, following the release of surprisingly strong Japanese growth data, which showed export volumes held up well against new U.S. tariffs. U.S. Treasury Secretary Scott Bessent's remarks earlier this week that the Bank of Japan could be "behind the curve" in dealing with the risk of inflation proved to be another tailwind for the yen this week. Sterling rose against a weakening dollar on Friday and was set to end the week higher after upbeat economic data and a hawkish rate cut by the Bank of England. The pound was last up 0.3% to $1.35705, taking its gains for the week to 0.9%. Elsewhere, bitcoin and ether rose after dropping about 4% each on Thursday. Bitcoin had at one point touched a record high on Thursday as increasing expectations for easier monetary policy from the Fed added to optimism stemming from a pro-crypto regulatory environment in Washington. (Reporting by Saqib Iqbal Ahmed; Additional reporting by Stefano Rebaudo; Editing by Shri Navaratnam, Kim Coghill, Christina Fincher, Joe Bavier and Andrew Heavens)
