Gold drops over 1% after in-line US inflation data
Gold | 2026-08-26 14:47:40
Gold prices extended losses on Wednesday after U.S. inflation data came largely in line with expectations, increasing bets on a Federal Reserve interest-rate hike next month, while investors also awaited remarks from Chairman Kevin Warsh this week.
By Aug 26 (Reuters) - Gold prices extended losses on Wednesday after U.S. inflation data came largely in line with expectations, increasing bets on a Federal Reserve interest-rate hike next month, while investors also awaited remarks from Chairman Kevin Warsh this week.
Spot gold fell 1.3% to $4,595.93 per ounce by 1:57 p.m. EDT (1757 GMT), after prices had climbed to their highest since May 14 on Tuesday. U.S. gold futures settled 0.9% lower at $4,653.30.
The dollar rose 0.3%, making greenback-priced bullion more expensive for holders of other currencies.
"Gold's price action up to today's data was just some profit taking ... PCE data came in largely in line with expectations, so we're consolidating within yesterday's range at this point," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
The Personal Consumption Expenditures Price Index, which the Fed uses to set its inflation target, increased 3.7% in the 12 months through July, the Commerce Department's Bureau of Economic Analysis said on Wednesday. Economists polled by Reuters had forecast a reading of 3.6%.
Traders now see a 40% chance of a rate hike next month, compared with 36% before the data, and are pricing in a 60% chance that the Fed will leave rates unchanged, according to the CME FedWatch Tool.
Non-yielding gold often loses its appeal in a high-interest-rate environment.
"I think the uptrend in gold is beginning to reassert itself. So I do see potential back above $5,000 this year," Grant said, adding that there is potential for gold to reach new all-time highs by the second quarter of 2027.
On the geopolitical front, Iran and Oman are still working on the details of an agreement on the Strait of Hormuz, a senior Iranian source said on Wednesday, after Iran's Revolutionary Guards said the two countries had agreed how to share the waterway and its revenue.
Among other metals, spot silver fell 1% to $67.93 per ounce, platinum dropped 1.4% to $1,831.67, and palladium was down 0.1% at $1,324.63.
