Gold falls below $4,350 as rising oil prices, US PPI reinforces Fed hike bets
Gold price (XAU/USD) tumbles to near $4,320 during the early Asian session on Friday. The precious metal faces some selling pressure after the US Producer Price Index (PPI) inflation data and rising oil prices increased bets for a Federal Reserve (Fed) rate hike.
Gold prices dipped below $4,350 on Friday as higher oil prices and unexpectedly strong US Producer Price Index (PPI) data fueled speculation of an imminent Federal Reserve (Fed) rate increase. The precious metal has historically been viewed as a safe-haven asset during times of economic and political uncertainty. On Thursday, the Bureau of Labor Statistics (BLS) reported that the US PPI rose 5.4% year-over-year in August, slightly above market expectations.
This data, coupled with rising oil prices, prompted traders to anticipate a 70% probability of a Fed rate hike next week, up from 62% prior to the release. Traders will closely monitor the US Consumer Price Index (CPI) report later in the week for further clues about inflation trends. Currently, gold is trading below the 100-day simple moving average and the Bollinger middle band, signaling a mildly bearish near-term outlook.
Central banks, which hold a significant portion of global gold reserves, often increase their gold holdings to bolster their economies and currencies during turbulent times.
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Also reported by 4 other outlets
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