US Inflation Report Triggers Selloff in Gold and Crypto

A new US inflation report released on September 10 sent shockwaves through financial markets, causing gold and cryptocurrency prices to plummet. The Bureau of Labor Statistics reported a 0.4% monthly increase in producer prices, matching forecasts, but the annual rate rose to 5.4%, slightly above expectations.

The news had a devastating impact on traditional safe-haven assets like gold, which fell by over 1%. Spot XAU/USD dropped below $4,400 after trading at that level earlier. This move is particularly concerning for forex traders, who could lose around $10,000 per standard gold lot due to the decrease.

The real damage came from bonds, as the 10-year Treasury yield rose above 4.9%, its highest since October 2023, and the 30-year reached roughly 5.35%. Higher yields make cash and government debt more attractive, pushing down the value of gold, which pays no interest.

The report's detail mattered, as three-quarters of the goods increase came from energy, making it look like an energy shock rather than a broad inflationary surge. The dollar also strengthened as rate-hike bets rose, adding another headwind for dollar-priced gold.