Gold Hit Hard by US Inflation Data

Gold prices plummeted on Thursday, August 14, 2025, after robust US Producer Price Index (PPI) data for July revealed persistent inflationary pressures, boosting the US Dollar and dimming hopes for a Federal Reserve rate cut.

The US Bureau of Labor Statistics reported a 0.9% month-over-month PPI surge, the largest since June 2022, with the annual rate hitting 3.3%, exceeding market expectations of 2.5%. This contrasted with June’s 2.4% and a prior 0.0% monthly reading, driven by tariff-related cost pass-throughs. The US Dollar Index rose 0.3%, capitalizing on steady jobless claims data signaling labor market strength.

Gold, inversely correlated with the dollar, fell to $333 per troy ounce from Wednesday’s $3,356 close, with intraday swings between $3,374 and $3,329. The data slashed expectations for a 50-basis-point Fed rate cut in September, with some traders now anticipating unchanged rates, enhancing the dollar’s appeal as a high-yield asset. This shift increases the opportunity cost of holding non-yielding gold, fueling its decline.

While tariff-driven inflation raises concerns about rising consumer prices, gold’s safe-haven allure may find support if trade or geopolitical tensions escalate. Investors await Friday’s Retail Sales and University of Michigan Consumer Sentiment data for further Fed policy cues, which could dictate gold’s near-term trajectory amid a stronger dollar and elevated yields.