US Inflation Report Sparks Market Sell-Off as Gold and Crypto Plummet
A recent US inflation report sent shockwaves through global financial markets, causing gold and crypto assets to plummet. The data showed that US producer prices rose 0.4% in August, matching forecasts, while the annual rate reached 5.4%, slightly above the expected 5.3%. This unexpected increase in inflation sparked a sell-off in gold, with spot XAU/USD falling over 1% to around $4,350.
The bond market also reacted strongly to the news, with the 10-year Treasury yield pushing above 4.9%, its highest since October 2023. This sharp increase in yields makes cash and government debt more attractive, further pressuring gold and other assets that pay no yield, such as Bitcoin.
For forex traders, this move is particularly painful, with a standard gold lot representing 100 ounces. A $100 drop means roughly $10,000 in losses on a one-lot long position, excluding trading costs.