Gold prices drop to USD 4,560 per ounce as markets price in Fed rate hikes after stronger-than-expected US producer inflation.
Gold prices fell as much as 2% to USD 4,560 per troy ounce, extending losses after US producer price data reinforced expectations of Federal Reserve rate hikes. The drop erased gains from earlier in the week, when prices neared USD 4,700.
Markets now price in a 15-basis-point increase in US key rates by year-end, with a full 25-basis-point hike expected by March 2027. The 10-year Treasury yield climbed 20 basis points to 4.54%, its highest level in a year, raising the opportunity cost of holding non-yielding gold.
Additional pressure came from India, where import taxes on gold surged from 6% to 15%, likely curbing physical demand. India’s gold imports had already hit a 30-year low in April following prior tax increases.