Gold slipped on Thursday after touching a fresh two-month high earlier in the session, as traders booked profits following a run driven by soft inflation data. A weaker-than-expected July producer price report pushed rate hike odds lower, while Brent crude snapped a six-day winning streak as tensions over the Strait of Hormuz persisted.
Gold prices fell on Thursday as bullion took a breather after hitting a fresh two-month high earlier in the session. At 16:27 ET, spot gold dipped 1.3% to $4,352.23 an ounce. Over the same span, gold futures dropped 1.3% to $4,408.09 an ounce.
Producer prices cool further
A day after an in-line July consumer inflation report, investors turned to producer price data for the same month. The headline July producer price index was flat month over month, while rising 4.7% year over year. In June, headline PPI had slipped 0.1% month over month and climbed 5.5% year over year.
July core PPI added 0.2% month over month and 4.2% year over year, against estimates of 0.3% and 4.2%, respectively. In June, core PPI had risen 0.4% month over month and 4.7% year over year. Both headline and core inflation gauges have now moderated on an annual basis, though the Fed prefers to track core personal consumption expenditures data to gauge price pressure.
Fed rate-hike odds slide
Currency market participants reacted to the report by paring back expectations for further tightening. As per the CME FedWatch tool, the odds of a September rate hike slipped to about 34% after the PPI release, while the odds of the Fed holding rates steady rose to nearly 66%. Lower-rate environments tend to boost non-yielding assets such as gold.
Oil snaps six-day rally amid Hormuz standoff
Oil prices lost steam Thursday after a lengthy advance. Brent crude futures, which had logged a six-day winning run, were last down 2.3% to $86.97 a barrel.
The U.S. and Iran remain at odds over control of the Strait of Hormuz. Washington officials, including President Donald Trump, have insisted the chokepoint stays open to commercial ships, while Tehran has said otherwise and demanded a halt to hostilities and the unfreezing of Iranian assets before it changes course. Traffic through the strait has trickled to its lowest levels since mid-May, according to shipping tracker Kpler. Separately, attacks on ships in the Bab el-Mandeb Strait by Iran-backed Houthi rebels in Yemen have added to the supply disruption concerns weighing on the region's shipping lanes.
Source: Commodities & Futures News
Trading involves risk.
Risk Disclaimer
