Us Inflation Impact Sends Gold Prices Lower Amid Fed Rate Hike Fears

. Later in the day, gold recovered some losses but still stayed under pressure overall. At 09:02 ET (13:02 GMT), spot gold was down 2.5% at $4,152.81 per ounce, as per several reports.

Gold futures also fell 2.5% and were trading at $4,179.05 per ounce. The U.S. Consumer Price Index (CPI) showed prices rose 0.5% month-on-month in May, matching market expectations.

On a yearly basis, inflation stood at 4.2%, matching what experts had anticipated. After the inflation data was released, U.S. Treasury yields fell slightly and the U.S. dollar also became weaker. When the dollar is strong, gold becomes more expensive for buyers in other countries, which can reduce demand. This often leads to lower gold prices.

On Tuesday, gold had already fallen more than 1% to a two-month low, as markets sold off and traders expected possible U.S. interest rate hikes this year. Spot gold dropped 1.5% to $4,264.70 per ounce and had touched its lowest level since March 23 before slightly recovering. U.S. gold futures for August also fell 1.8% to $4,286.4 per ounce during the session.

Market expert Bob Haberkorn said traders were nervous and many markets moved into “risk-off” mode, which pulled gold prices down, as reported by Reuters. He also said gold and silver will likely stay under pressure until the U.S. Federal Reserve gives clearer signals on interest rates.

Investors are now focused on upcoming inflation reports like CPI and Producer Price Index (PPI) for more clues on future Fed decisions. Commerzbank said if inflation comes in higher than expected, gold could fall further, but prices may recover later if the Fed does not raise rates, as reported by Reuters.

Traders are currently pricing in about a 68% chance of a Federal Reserve rate hike in December, based on CME FedWatch data. Oil prices also fell after Iran and Israel said they had stopped attacks following an appeal from U.S. President Donald Trump, which reduced geopolitical tension. Lower oil prices can reduce inflation pressure, but higher energy costs earlier can still keep interest rates high, which is negative for gold, as per Reuters report.

Durva More is a Senior Content Producer at Hindustan Times, where she covers finance, and global news. She brings experience across digital and television journalism, with a strong focus on breaking news, business reporting, and international affairs. Before joining Hindustan Times, Durva worked as an International News Writer at The Economic Times, covering a diverse range of subjects including global politics, business, sports, entertainment, and major world events. She also worked as a Business Reporter with NDTV Profit. A postgraduate diploma holder in Journalism from the Asian College of Journalism, Durva is passionate about field reporting and storytelling. She thrives on the adrenaline of chasing stories, speaking with people from different walks of life, and amplifying voices that deserve to be heard. Her reporting is driven by curiosity, accuracy, and a commitment to making complex subjects accessible to readers. When she is not chasing stories or covering breaking news, Durva enjoys reading books and painting. She loves exploring new ideas, meeting people, and learning about different perspectives. For her, both journalism and art are ways to understand the world and tell stories that matter.Read More