Dollar Surge Sinks Gold Amid Stronger-Than-Expected Inflation Data
The US dollar strengthened on Thursday after the release of stronger-than-expected July Personal Consumption Expenditures (PCE) price index data, leading to a sharp selloff in gold.
The PCE price index rose 3.7% year-over-year and 0.2% month-over-month, both 0.1 percentage point above consensus estimates, while core PCE came in at 3.3% year-over-year and 0.2% month-over-month.
Following the data release, interest rate futures markets priced in a higher probability of a September rate hike, with the U.S. dollar index climbing approximately 0.25% to around 99.14.
Gold prices fell sharply, formally completing a bearish 'Evening Star' candlestick pattern on the daily chart, and are now testing support at the 200-day simple moving average (SMA), currently located near $4,590.