Title: Gold Down, as Red-hot U.S. Inflation Data Grow Fears of Huge Interest Rate Hikes

Jul 14, 2022 12:51AM ET

By: AnalysisWatch

Gold fell in Asia on Thursday morning as expectations grew that the Federal Reserve of the United States would raise interest rates more aggressively this month to combat rapidly rising inflation.

Gold futures fell 0.41% to $1,728.35 by 12:16 AM ET, while the dollar, which normally moves inversely to gold, jumped on Thursday morning.

Yields on 10-year U.S. Treasury bonds rose, dampening demand for zero-yielding gold.

Data released overnight showed the U.S. consumer price index rose 9.1% in June, the highest in four decades.

"The release of the consumer price index provided volatility, but not direction," said Ilya Spivak, currency strategist at DailyFX.

As expectations grew that the Fed would raise interest rates by a historic percentage point later this month, Fed Bank of Atlanta President Raphael Bostic said "everything is in play" to combat price pressures.

"It would be silly to say 75 basis points is dovish, but there is a risk that the Fed does something that is objectively large, like 75, but gold goes up because it's not 100," Spivak said, adding that gold now needs support around $1,715-$1,717.

Among other precious metals, silver fell 0.67%. Platinum slipped 0.26%, while palladium fell 0.25%