Gold and Silver Prices Fall Sharply Amid Strong US Economic Data

Gold and silver prices fell sharply on Friday as investors reassessed the Federal Reserve's interest-rate outlook following stronger-than-expected US economic data. The July PCE price index rose 0.2% month-on-month, exceeding expectations of 0.1%, while annual inflation accelerated to 3.7% from forecasts of 3.6%. Core PCE increased 0.2% month-on-month and 3.3% year-on-year, both matching expectations.

The stronger-than-expected US data reinforced concerns that persistent inflation and resilient economic activity could limit the Fed's scope for near-term monetary easing. Consequently, markets now price around a 60% probability of the Fed leaving rates unchanged next month, compared with 64% before the data. Gold prices settled sharply lower by 1.98% at ?159,663.

Silver prices also fell sharply, settling lower by 1.84% at ?239,638 as rising US Treasury yields and stronger economic data increased caution over the Federal Reserve's interest-rate path. Citi maintained a bullish outlook for silver, forecasting it to reach $75 per ounce over the next three months and potentially $90 over six to 12 months.