Gold Tumbles Amid Strong US Producer Price Data and Rate Hike Bets
Gold prices plummeted to around $4,350 an ounce on Thursday due to rising expectations of a Federal Reserve rate hike following stronger-than-expected US producer price data. The US PPI rose 0.4% in August, exceeding the forecast annual producer inflation rate of 5.3%, which accelerated to 5.4%. Energy prices surged, and signs of greater cost pass-through across broader sectors emerged.
The data released coincided with a fresh rally in oil prices amid escalating US-Iran strikes in the Middle East. Investors now price in a more than 70% probability of a Federal Reserve rate hike on September 16. Meanwhile, traders also raised bets on further ECB tightening after the central bank delivered an expected rate hike and warned that inflation risks remained tilted to the upside.