Gold falls after US inflation data raises concerns about jumbo rates being hiked

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The dollar and Treasury yields fell on Thursday. Gold prices dropped as bullion was affected by worries that the Federal Reserve may increase interest rates aggressively this month. This is after data revealed that U.S. inflation rose to an all-time high in June.

FUNDAMENTALS

Spot gold dropped 0.4% to $1.728.39 an ounce at 0100 GMT. U.S. futures fell 0.5% to $1726.60

The dollar rose to new 20-year highs, reducing demand for greenback gold by buyers who hold other currencies.

* Benchmark U.S. 10-year Treasury yields rose, weighing on appetite for zero-yield gold. The U.S. annual consumer price index jumped 9.1% in June. This is the largest jump in over four decades. Americans will need to dig deeper to cover fuel, food, and rent.

The markets moved wild on Wednesday as the euro crossed parity with the dollar for the first-time in 20 years. Investors were also concerned that Fed rate increases could be even more severe. The Fed is seen intensifying its fight with sky-high inflation, with a huge 100 basis points rate increase at its next policy meeting on July 26-27.

* Although gold is seen as an inflation hedge, higher rates hurt the appeal of bullion, which bears no interest. The inflation report led to gold prices falling to an all-time low of $1,029 per ounce. However, bullion recovered sharply and ended the session higher after a rally in the dollar. SPDR Gold Trust, which is the world’s largest exchange-traded gold fund, stated that its holdings dropped 0.17% from 1,021.53 tons Tuesday to 1,019.79 tonnes.

Spot silver declined 0.4% to $19.11/ounce. Platinum fell 0.8% at $847.75. Palladium fell 0.5% up to $1,964.74.

DATA/EVENTS (GMT)


0130 Australia Employment June

0130 Australia June Unemployment Rate

1230 US Initial Jobless Clm Weekly

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