Gold Slides as US Inflation Expectations Rise Ahead of PPI Data
Gold prices have been trading with a downside bias on Thursday, reversing earlier gains as the US Dollar stabilizes ahead of the United States Producer Price Index (PPI) data due at 12:30 GMT.
The PPI is forecast to rise 0.4% on a monthly basis after remaining unchanged in July, while the annual rate is expected to accelerate to 5.3% from 4.7%. Core PPI, which excludes volatile food and energy prices, is expected to rise 0.3% MoM, up from 0.2%
Rising oil prices are already adding to inflation concerns, so a stronger-than-expected PPI reading could further reinforce expectations that the Federal Reserve (Fed) will raise interest rates at its September 15-16 meeting.
According to the CME FedWatch Tool, traders price in around a 62% probability of a rate hike next week. However, most economists surveyed by Reuters expect the central bank to keep interest rates unchanged through the end of the year.