Gold price subdued as hot US inflation curbs hopes of larger Fed cut

Gold prices slumped on Thursday as hotter-than-expected US inflation data and a drop in jobless claims slashed the odds of a supersized rate cut next month.

Spot gold fell 0.3% to around $3,344 an ounce by 10:30 a.m. ET, while US gold futures were 0.4% lower at about $3,394 an ounce in New York.

Gold’s decline comes after the Labor Department reported a 3.3% year-on-year rise in the producer price index last month, surpassing forecasts of 2.5%. Weekly jobless claims also came in lower than expected, at 224,000 versus 228,000 forecast.

Both the US dollar index and benchmark 10-year yields responded positively to the data, denting the appeal of gold.

“Gold trades lower as the stronger-than-expected US 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,” Ole Hansen, Saxo Bank’s head of commodity strategy, said in a note to Reuters.

A stronger US wholesale price data also 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.

Earlier in the day, Treasury Secretary Scott Bessent urged the US central bank to be aggressive on cutting rates, suggesting that the benchmark rate should be at least 150 basis points lower than it is now. 

“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,” Hansen said.

One of the year’s top-performing assets, gold has risen by nearly 30% in 2025, with the bulk of those gains occurring in the first four months. The metal has been supported by heightened geopolitical and trade tensions that have spurred haven demand, as well as expectations of lower interest rates.

(With files from Reuters)