Gold Sinks to 16-Month Low as U.S Inflation Skyrockets
Gold prices fell to a 16-month low early Wednesday after the United States reported inflation inched upward at the fastest pace in 41 years in June, stoking the dollar and cutting bond yields.
Gold for August delivery was last seen down US$17.10 to US$1,707.70 per ounce, the lowest since March 2021, after it touched US$1,729.70 prior to the release of the US inflation data.
US prices rose by 9.1% in June, the fastest pace since 1981 and ahead of the consensus analyst estimate of 8.8%, according to an inflation report released today.
The unexpectedly strong increase is likely to prompt yet higher interest rates from the Federal Reserve, raising recession worries with European stock markets dropping following the data release while futures point to a lower open for most US exchanges.
The US dollar surged following the release on expectations of higher rates, making the metal more expensive for international buyers. The ICE dollar index was last seen up 0.31 points to 108.36.
Bond yields also rose sharply on expectations higher rates are on the way, bearish for gold since it offers no interest. The yield on the US 10-year note was last seen up 6.9 basis points to 3.047%. # Gold Sinks to 16-Month Low as U.S Inflation Skyrockets
