Gold Tumbles on Rising Inflation and Bond Yields Ahead of Fed Decision

Gold prices have taken a hit in recent weeks due to rising US inflation and bond yields. In two weeks, gold has fallen over 6.50 per cent as investors weigh their options ahead of the Federal Reserve's policy meeting next week.

The US producer price index (PPI) is due out later today, followed by the consumer price index (CPI) on September 11. Both data points are closely watched by markets as they can influence expectations around the Fed's decision.

Ross Maxwell, chief strategy officer at VT Markets, notes that hotter inflation could push US yields and the dollar higher, putting pressure on gold prices in dollar terms. However, a stronger dollar could also weaken the rupee, providing some support to gold prices in India and limiting the downside.