Gold edges lower after Wednesday’s inflation report showed flat growth in June, in counterpoint to a report on Tuesday that showed marked inflation growth in the same month.
The producer price index from the Bureau of Labor Statistics for June showed no change providing a conflicting sign over whether tariffs threaten to boost inflation. Economists had been looking for an increase of 0.2%. Spot gold slipped $14 an ounce on the report.
Gold had risen after a key U.S. inflation report released Tuesday showed that the cost of goods and services accelerated to the highest level since February. Investors are also closely watching U.S. President Donald Trump’s tariff policies for indications on the state of the economy.
The yellow metal had tipped up earlier in the morning, supported by a weakened dollar that slipped from a one-month peak and slumping Treasury yields. A weaker dollar and declining Treasury yields are typically bullish for gold, making the yellow metal a more attractive alternate investment, particularly to holders of other currencies. Gold is also a traditional hedge against geopolitical and economic uncertainty.
August gold futures fell 0.7% Tuesday to settle at $3,336.70 an ounce on Comex, and the front-month contract slid 0.8% in the first two days of the week. Bullion slipped 0.2% in June after losing 0.1% in May and increasing 5.4% in April. It’s up 26% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently down $5.30 (-0.16%) an ounce to $3331.30 and the DG spot price is $3325.90.
The core consumer price index, excluding volatile food and energy prices, gained 0.2% in June, slightly below economists’ expectations for 0.2%, while the annual rate was 2.9%, in line with estimates. Including food and energy prices, headline CPI increased 0.3% for the month and 2.7% year on year, in line with estimates.
The CPI and PPI data are being closely monitored for a snapshot of U.S. economic conditions. The Federal Reserve watches both inflation and jobs data when setting monetary policy.
Trump’s policy of threatening – and imposing – tariffs on key trading partners is starting to be felt in the cost of goods in the U.S., as the CPI report showed that prices rose for appliances, clothing, and furniture, categories of goods exposed to Trump’s tax on imports.
The president said Tuesday that he was likely to levy duties on pharmaceuticals as soon as the end of the month and soon on semiconductors, too. His reciprocal tariffs on many countries are scheduled to go into effect Aug. 1, barring any extensions or bilateral trade agreements.
Separately, Trump has increasingly called on the central bank to accelerate planned interest rate cuts. But most investors are still betting that the Fed will begin rate cuts at its September meeting, not the next one at the end of this month, according to the CME FedWatch Tool. The Fed kept interest rates unchanged at 4.25% to 4.50% in June, though policymakers signaled that the central bank is still factoring two interest rate cuts this year.
The Fed reduced rates three times in 2024 but has held them steady this year. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures lost 1.6% Tuesday to settle at $38.11 an ounce on Comex, and the most-active September contract declined 2.2% in the first two days of the week. Silver increased 9.5% in June after adding 0.6% in May and dropping 5.2% in April. It rose 21% in 2024. The September contract is currently down $0.160 (-0.42%) an ounce to $37.950 and the DG spot price is $37.66.
Spot palladium increased 0.4% Tuesday to $1,213.50 an ounce but is down 1% so far this week. Palladium surged 14% last month after advancing 2.8% in May and falling 4.9% in April. Palladium dropped 17% last year. The current DG spot price is up $26.20 an ounce to $1239.00.
Spot platinum retreated 0.2% Tuesday to $1,382.60 an ounce and is down 1.4% this week. It climbed 27% last month after gaining 8.6% in May and retreating 3.1% in April. Platinum lost 8.4% in 2024. The DG spot price is currently up $8.20 an ounce to $1398.30.
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