Gold Prices Retreat as Strong U.S. Data Boosts Dollar and Yields
Sunday, August 17th 2025
Gold prices slipped on Thursday, pressured by robust U.S. economic data that strengthened the dollar and Treasury yields. The upbeat numbers dampened expectations for an aggressive Federal Reserve rate cut in September.
Market Snapshot
- Spot Gold: Down 0.5%, trading at $3,337.21 per ounce as of 1:50 p.m. ET (1750 GMT)
- U.S. Gold Futures (Dec Delivery): Settled 0.7% lower at $3,383.20
- Dollar Index: Gained 0.5% from a two-week low
- Benchmark 10-Year Treasury Yield: Rebounded from a one-week low
A stronger dollar typically makes gold more expensive for non-U.S. buyers, while rising yields increase the opportunity cost of holding non-yielding assets like bullion.
Hot U.S. Inflation and Jobs Data Shake Rate Cut Bets
The U.S. Producer Price Index (PPI) rose 3.3% year-on-year in July, well above the 2.5% forecast. Additionally, weekly jobless claims came in at 224,000, lower than the expected 228,000.
According to Ole Hansen, Head of Commodity Strategy at Saxo Bank:
“The stronger-than-expected PPI may reduce the odds of a larger rate cut, as it could feed into higher Core PCE inflation for July. This likely keeps the Fed cautious.”
While these figures have cooled hopes for a half-point September cut, Hansen maintains a bullish long-term outlook on gold, citing the Fed’s eventual need to balance inflation control with economic support.
Fed Signals Smaller, Gradual Cuts
Market expectations now lean toward a quarter-point cut in September, followed by another in October. This aligns with remarks from Fed’s Mary Daly, who pushed back against the need for a 50-basis-point move next month.
Gold Still Seen as Long-Term Winner
Despite the short-term pullback, analysts see the rally as a pause rather than a reversal.
Kiril Kirilenko, Senior Precious Metals Analyst at CRU, noted:
“We don’t think the rally has stalled—it’s consolidating. A catalyst like interest rate cuts could reignite it. We expect gold to retest the $3,500 record high by year-end or early next year.”
Other Precious Metals Performance
- Silver: Fell 1.3% to $37.97 per ounce
- Platinum: Rose 1.1% to $1,354.33
- Palladium: Gained 2% to $1,144.50
Bottom Line:
The combination of stronger inflation data and resilient labor markets has tempered hopes for a major Fed cut in September. While gold faces short-term pressure, the long-term outlook remains constructive, with the possibility of record highs returning in the months ahead.
