Gold Falls on Friday as Investors Take Profits After Softer Inflation Data

Gold prices fell on Friday and are headed for a weekly loss after investors took profits following softer US inflation data. The data had previously driven gold to its highest level in over two months, but it was not enough to sustain the breakout above $4,400.

The July consumer inflation rate eased to 3.4% year on year from 3.5% in June, while producer prices were unchanged on the month and slowed to 4.7% annually from 5.5%. These numbers have cut the implied probability of a September Fed rate increase to about 35%, from roughly 55% a week earlier.

Tastylive macro strategist Ilya Spivak believes the latest decline is due to speculative investors locking in gains after a rapid rebound, rather than a fundamental deterioration in gold's outlook. Gold's failure to hold above $4,400 has turned that area into the immediate test for the next leg higher.

Global physically backed gold ETFs attracted $3 billion in July, reversing two consecutive months of outflows, while holdings increased by 23 tonnes to 4,068 tonnes. UBS is also constructive over the longer term, forecasting gold at $5,000 during the first half of 2027.