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Gold Prices Dip as US Inflation Dents Rate Cut Hopes for September

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Business Honor
16 August, 2025

US inflation data reduces expectations of a Federal Reserve rate cut, impacting gold.

Gold prices are headed for a weekly fall following hotter-than-anticipated US inflation data, which has reduced market hopes of a Federal Reserve interest rate cut in September. Spot gold was unchanged at $3,336.45 an ounce on Friday morning in Singapore, but is to record a 1.8% fall for the week. The precious metal fell by 0.6% in the last session after US wholesale inflation data for July reflected the highest acceleration in three years. The unexpected inflation figures have caused US Treasury yields to rise and also the US dollar to strengthen, which generally undermines gold prices. Gold is denominated in US dollars and does not yield interest, so increased interest rates and a higher dollar value reduce the attractiveness of the metal. Traders now believe there is only a 90% chance of a September rate cut by the Federal Reserve, down from near certainty within the week, according to Bloomberg.

Despite last week's decline, the commodity continues to be more than 25% higher this year. The increase, which was most severe in the first four months of 2025, has been driven by rising geopolitical tensions, trade uncertainty, and strong demand for safe-haven assets. Central banks in the world have also been accumulating gold reserves, adding to the price. The Precious metals market is also seeing volatility as silver prices stayed steady, while platinum and palladium saw slight declines. Investors are also watching the latest uncertainty about potential US tariffs on gold bars, which last week briefly hit prices. With inflationary pressures still in place and geopolitical threats still elevated, the spotlight now focuses on the Federal Reserve's September meeting. The result will probably determine if gold can continue to rise or sustain more profit-taking.