XAU/USD falls nearly 2% as Fed rate hike bets rise amid stubborn inflation and resilient consumer spending data.
Gold (XAU/USD) retreated to its lowest level in over a week, trading near $4,554 as a stronger US Dollar and rising Treasury yields weighed on demand. The decline followed data showing US inflation accelerated to 3.8% YoY in April, the highest since May 2023, while producer prices surged 6% YoY.
Markets now price a 45% chance of a Fed rate hike by December, up from 33% a day earlier, as higher energy costs threaten disinflation progress. The 10-year Treasury yield hit a one-year high, reducing gold’s appeal as a non-yielding asset.
Consumer spending remained robust, with US retail sales rising 0.5% MoM in April, reinforcing expectations for prolonged tight monetary policy.