Inflation Surge Sends Gold, Bitcoin Reeling Amid Rate-Hike Bets
A hot US inflation report on September 10 sent shockwaves through financial markets, including Gold and Bitcoin. The producer price index (PPI) rose 0.4% in August, matching forecasts, but the annual rate reached 5.4%, slightly above expectations.
The sharp increase in energy prices led to a surge in US inflation, with more than three-quarters of the goods increase coming from this sector. The Bureau of Labor Statistics reported that 'Prices for final demand goods advanced 1.1 percent, and the index for final demand services increased 0.1 percent.'
The dollar strengthened as rate-hike bets rose, making it even tougher for investors to hold onto gold. The price of spot XAU/USD fell more than 1%, dropping toward $4,350 after trading above $4,400. For forex traders, this move means a significant loss on long positions.
The real damage came from the bond market, where yields rose sharply. The 10-year Treasury yield pushed above 4.9%, its highest since October 2023, while the 30-year reached roughly 5.35%. Higher yields make cash and government debt more attractive, further hurting gold's appeal.
CME FedWatch pricing moved toward a 70% chance of a September rate hike after the data, up from roughly 62%. The next test comes on Friday with US CPI (Consumer Price Index). Another hot reading would put even more pressure on the Federal Reserve to hike rates and further test how far 'inflation hedges' can fall when inflation itself becomes the problem.