Gold slides away from $1800 on soaring US T-yields

Gold has dived in the negative direction for the day after a reversal from near $1800. The Gold Index peaked at $1799 during the US trading session and then turned to the downside falling around $1785.

Thursday’s data showed the Producer Price Index in the US dropped by 0.5% in July, and the annual rate fell to 9.8%, against expectations of a 0.2% monthly advance. On Wednesday, it was reported the Consumer Price Index was unchanged in July against expectations of a 0.2% gain. The decline in inflation weighed on the US dollar.

Investors and observers expect the Fed to hike by at least 50 basis points at the September meeting. However, US yields are up even amid the probability of an inflation peak in the US. The US 10-year yield is up 1.90% at 2.83%, while the 2-year is at 3.20%, both at the highest level in almost a week.

The increase in US yields limited the upside in gold. The Gold Index’s inability to hold above 1800$, even after the recent US data, triggers doubt about the rally. The immediate support is seen at $1785 followed by the weekly opening at $1774. If the yellow metal consolidates above $1800 more gains seem likely.