US Producer Inflation Boosts Fed Hike Expectations, Sending Gold and Silver Prices Lower
Gold and silver prices declined sharply on Thursday following stronger-than-expected US producer inflation data. The figures, released in August, showed a 0.4 percent monthly increase and a 5.4 percent annual rise.
The Producer Price Index (PPI) surpassed market forecasts of 5.3 percent, with the revision from July's growth of 4.8 percent also contributing to the upward trend. This led to increased expectations that the Federal Reserve will raise interest rates at its September 16 meeting, with money markets pricing in a greater than 70 percent chance.
The European Central Bank (ECB) also raised its three main policy rates by 25 basis points on Thursday, warning of ongoing upward inflation risks. This move typically puts pressure on gold and silver due to their lack of returns.
Oil prices rose amid escalating tensions in the Middle East, further contributing to concerns about persisting inflationary pressures.