By Sherin Elizabeth Varghese
(Reuters) – Gold prices fell on Thursday as hotter-than-expected U.S. inflation data and a drop in jobless claims lifted the dollar and Treasury yields, trimming the odds of a supersized September rate cut.
Spot gold fell 0.5% to $3,337.21 per ounce as of 1:50 p.m. ET (1750 GMT). U.S. gold futures for December delivery settled 0.7% lower at $3,383.2.
The dollar index gained 0.5% from an over two-week low, making bullion less attractive for non-U.S. buyers, while benchmark 10-year yields rose from a one-week low. [USD/] [US/]
Stronger U.S. wholesale price data tempered bets on a larger, half-point cut next month. The Labor Department reported the producer price index rose 3.3% year-on-year in July, beating forecasts of 2.5% while weekly jobless claims 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 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.”
Traders are now leaning toward a quarter-point move next month with another in October, reinforcing comments from Fed’s Mary Daly pushing back against the need for a 50-basis-point cut in September.
Gold, a traditional refuge in times of economic or geopolitical strain, tends to benefit from low interest rates.
“We don’t think the rally has stalled — it’s just consolidating, with bulls waiting for a new catalyst. Interest rate cuts would be the one to reignite the rally,” said Kiril Kirilenko, senior precious metals analyst at CRU.
Gold will likely retest the $3,500 record high by year-end or early next, Kirilenko added.
Elsewhere, spot silver lost 1.3% to $37.97 per ounce, platinum gained 1.1% to $1,354.33, and palladium rose 2% to $1,144.5.
(Reporting by Sherin Elizabeth Varghese and Ashitha Shivaprasad in Bengaluru; Editing by Leroy Leo)
