By Sherin Elizabeth Varghese
(Reuters) -Gold prices were subdued on Thursday as hotter-than-expected U.S. inflation data and a drop in jobless claims lifted the dollar and Treasury yields, trimming the odds of a supersized September rate cut.
Spot gold fell 0.1% to $3,352.65 per ounce as of 9:15 a.m. ET (1315 GMT). U.S. gold futures for December delivery were down 0.2% to $3,400.60.
The dollar index gained 0.2% from an over two-week low, making bullion less attractive for non-U.S. buyers, while benchmark 10-year yields edged up from a one-week low. [USD/] [US/]
Stronger U.S. wholesale price data tempered bets on a larger, half-point cut next month. Traders are now leaning toward a quarter-point move with another in October, reinforcing comments from Fed’s Mary Daly that such a large cut is not needed.
The Labor Department reported the producer price index rose 3.3% year-on-year in July, beating forecasts of 2.5%. Weekly jobless claims also came in lower than expected, at 224,000 versus 228,000 forecast.
“Gold trades lower as the stronger than expected U.S. PPI print may lower rate cut hopes (expectations) as they feed into a higher Core PCE inflation print for July as well, likely keeping the Federal Reserve cautious on rate cuts,” said Saxo Bank’s head of commodity strategy, Ole Hansen.
“Overall, the print does not alter our bullish view on gold as the Fed eventually will have to choose between fighting inflation or supporting the economy.”
Gold, a traditional refuge in times of economic or geopolitical strain, tends to benefit from low interest rates.
Investors also kept an eye on geopolitical risks. U.S. President Donald Trump warned of “severe consequences” if Russian President Vladimir Putin rejects a Ukraine peace proposal at their upcoming summit, hinting at a subsequent meeting with Ukraine’s leader.
Elsewhere, spot silver lost 1% to $38.11 per ounce, platinum gained 1% to $1,352.60 and palladium rose 1.7% to $1,140.81.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Leroy Leo)
