Gold set for weekly loss after hot U.S. inflation data

August 15, 2025 (MLN): Spot gold was down 0.02% at $3,338.00 an ounce as of [3:35 pm] PST, according to data reported by Mettis Global.

Gold prices were on track for a weekly decline on Friday after stronger-than-expected U.S. inflation figures dampened expectations of a large 50-basis-point interest rate cut by the Federal Reserve in September.

Tim Waterer, chief market analyst at KCM Trade, said gold is still feeling the effects of the sharp rise in the U.S. Producer Price Index (PPI), which has cast doubt on how much the Federal Reserve might cut interest rates this year.

Data from the Labor Department on Thursday showed that the PPI climbed 3.3% year-on-year in July, well above the forecasted 2.5% increase. Weekly jobless claims also came in stronger than expected at 224,000, compared to estimates of 228,000.

In contrast, U.S. consumer prices in July recorded only a slight uptick, fueling optimism for a Fed rate cut. However, the unexpectedly strong PPI figures have reduced the likelihood of an aggressive easing cycle, making a 50-basis-point cut at the Fed’s next meeting less probable.

Waterer cautioned that if wholesale price pressures persist and feed into consumer inflation, expectations for U.S. rate cuts could be scaled back, potentially weighing on gold’s appeal given its lack of yield.

Adding to the cautious outlook, St. Louis Fed President Alberto Musalem said a half-point cut in September is not justified, a day after Treasury Secretary Scott Bessent suggested it was still a possibility.

Gold typically performs better in a low-interest-rate environment.

On the geopolitical side, markets are not anticipating a major breakthrough in efforts to end the war in Ukraine from Friday’s meeting between Donald Trump and Vladimir Putin, despite some signals of progress.

Among other precious metals, spot silver dipped 0.2% to $37.91 per ounce, platinum declined 0.2% to $1,354.94, and palladium slipped 0.3% to $1,142.51.

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