Gold Falls Below $4,600 as Yields and Dollar Firm Up

The price of gold fell below $4,600 an ounce on Wednesday as yields and the dollar firm up after hotter-than-expected PCE inflation data. Spot gold was trading near $4,591.70 an ounce, down 1.42%, while spot silver was trading at $68.00, down 0.78% on the session.

The July Personal Consumption Expenditures (PCE) inflation rate rose 0.2% on the month and 3.7% from a year earlier, exceeding the consensus estimate of 3.6%. The data also showed that core PCE increased by 0.2% on the month and 3.3% year-over-year.

The market's reaction to the inflation data led to a shift in positioning against the lower-yields metals trade. Two-year yields moved above 4.22%, while the 10-year yield settled above 4.66%. The dollar index also rose, with October Fed-hike odds moving above 50%.

Gold's failure to hold above the $4,630 to $4,650 resistance area indicates that it is now more sensitive to inflation surprises than to fiscal-risk hedging alone.