Gold Prices Plummet After Inflation Data Undermines Rate Hike Expectations

Gold prices fell on Friday after investors locked in profits following a rally that took bullion to an over two-month high. The metal had climbed to its highest point since June 5, but settled 1.3% lower and wiped out its gains for the week.

The decline came as US inflation data was released, showing mild producer prices in July. This led market expectations that the Federal Reserve could keep interest rates unchanged next month. The report from the US Labor Department on Thursday followed news of mild consumer inflation last month.

Cleveland Fed president Beth Hammack reiterated her view that the US central bank should raise rates immediately to restrain growth and too-high inflation. However, her views are in contrast to market expectations.