Global Gold Prices Fall as US Producer Inflation Exceeds Forecast, Dollar and Treasury Yields Rise

Gold prices dropped on Thursday, August 14, after US inflation data came in hotter than expected and labor market figures showed resilience, pushing up the US dollar and Treasury yields.

Spot gold: down 0.5% to $3,337.21/oz

Gold futures: down 0.7% to $3,383.20/oz

Stronger Dollar and Higher Yields Pressure Gold

The US dollar index rose 0.5% from its lowest level in more than two weeks, reducing gold’s appeal for overseas buyers.
Meanwhile, the yield on 10-year US Treasury notes climbed from a one-week low, signaling market expectations for a more cautious monetary policy stance.

US Producer Inflation Beats Estimates

According to the US Department of Labor, the Producer Price Index (PPI) for July increased 3.3% year-over-year, well above the forecast of 2.5%.
This stronger-than-expected inflation reading has raised concerns that price pressures remain persistent, potentially discouraging the Federal Reserve from cutting interest rates aggressively.

Jobless Claims Indicate Resilient Labor Market

Weekly jobless claims came in at 224,000, below expectations of 228,000.
The data suggests the US labor market remains solid, reinforcing the view that the Fed has room to move cautiously on rate cuts.

Impact on Fed Rate Cut Expectations

Odds of a 0.50% rate cut in September have diminished.

Markets now lean toward a 0.25% cut in September, followed by another reduction in October 2025.

Fed’s Mary Daly has publicly opposed a 0.50% cut in September, favoring a more gradual approach.

Gold Faces Pressure from Monetary Policy Outlook

Gold, traditionally seen as a safe-haven asset during economic or geopolitical uncertainty, tends to benefit from lower interest rates.
However, with inflation still elevated and the Fed signaling caution, the short-term outlook for gold remains under downward pressure.