Gold Heads Lower This Week, Even as Dollar Soothes—PPI Surge Rocks Fed Outlook

 

By the end of trading Friday, gold found itself in a delicate spot: prices inched higher—buoyed by a slightly softer dollar—but the metal was still on course for a 1.5% slide on the week, thanks to dousing investor hopes for a bold Federal Reserve move.
Spot gold traded up around 0.2%, at $3,341.90 per ounce, while December futures ticked 0.1% higher, to $3,387.60. But it was the July Producer Price Index (PPI) that stole the spotlight—soaring 3.3% year-on-year and far exceeding the 2.5% forecast. This unexpected inflation flare-up rattled markets, sending rate-cut projections—especially for a half-percentage-point drop—into sharp decline.
Adding to the shift was fresh labor data: weekly jobless claims dropped to 224,000, lower than anticipated, reinforcing the perception of a still-resilient economy. In that environment, St. Louis Fed President Musalem ruled out the idea of a large Fed cut, countering signals from Treasury Secretary Bessent earlier in the week.
Gold has long thrived when interest rates are low—but as inflation signs grow and rate-cut expectations wane, the metal’s shine dulls. Yet, it wasn’t all negative: the dollar slid 0.2%, giving gold a modest lift by making it more palatable for foreign buyers.
Precious metals outside of gold offered a mixed picture. Silver crept up around 0.1% to $38.02, platinum rose 0.5%, but palladium dipped 0.2%, showing varying investor sentiment across the sector.
Despite the small bounce on Friday, the overarching story of the week was one of cooling enthusiasm—investors pulled back from aggressive rate-cut speculation, keeping gold under pressure and highlighting the tension between inflation risks and hopes for monetary relief.