Gold Prices Slump Ahead of Key Inflation Report
Gold prices are heading for their third consecutive weekly decline as market expectations of a Federal Reserve interest rate hike strengthen. Despite edging higher on Friday, spot gold was down over 2% for the week and up 0.3% for the day at $4,326.88 per ounce by 0020 GMT.
The US Producer Price Index for final demand rose 0.4% in August, data on Thursday showed, after an upwardly revised 0.1% gain in July. Following this, traders nudged up bets that the Fed will raise interest rates at its meeting next week, and spot gold subsequently fell nearly 2%.
A stronger-than-expected inflation reading could reinforce the case for several interest rate increases, potentially pushing Treasury yields and the dollar higher and placing additional pressure on gold, said Wael Makarem, financial markets strategist lead at Exness.