Gold Tumbles as US PPI and Oil Prices Surge
The US Producer Price Index (PPI) for August came in at 0.4% month-over-month, matching forecasts, but its annual rate reached 5.4%, slightly above the expected 5.3%. This reading, combined with surging energy prices and a rise in Initial Jobless Claims, has increased the chances of a 25-basis-point interest rate hike by the Federal Reserve at next week's meeting.
The West Texas Intermediate (WTI) crude benchmark cleared the $100 per barrel barrier for the first time since mid-May. The US Treasury yields are also rising, with the 10-year benchmark note soaring nearly 7 basis points to 4.93%. This hawkish sentiment is putting pressure on gold prices.
The Gold price has retreated by about 0.90% on Thursday as traders price in a hawkish Federal Reserve. The XAU/USD trades at $4,360 at the time of writing. The Relative Strength Index (RSI) signals that further sideways trading lies ahead.