Gold Slumps Amid Softer Interest Rate Expectations and Slowing US Inflation
The price of gold dropped by $80 per ounce to $4369 from its new 10-week high on Thursday, despite expectations that interest rates will soften further.
This decline in gold prices comes as US inflation slows down from 5.5% to 4.9% annual growth, according to forecasters, and the Producer Price Index slowed to 4.7% year-on-year growth in July.
In related news, US jobless benefits claims rose for the third week running, but only after hitting a 57-year low in mid-July, while continuing claims for unemployment insurance fell back towards early April's 2-year low.
The CME Fed Funds futures contracts traded at their lowest level since before mid-June's 'hawkish hold' at the first Fed meeting under new chairman Kevin Warsh, and inflation-protected bond yields also fell again, trading 9 basis points below end-July's touch of 2.47%, the highest such 'real interest rate' since November 2008.