Gold declines, awaiting more indications of rising U.S. interest rates

On Thursday, the December gold futures contract on the New York Comex fell $6.50, or 0.4%, to $1,807.20 per ounce.

It was gold's first loss in four days since last week's erratic U.S. employment data, which surprisingly drove the yellow metal back into the bullish $1,800 zone, rather than the sub-$1,700 red zone that many had predicted.

The spot price of bullion, which is monitored more carefully by some traders than futures, decreased by $6.51, or 0.4%, to $1,786.70 at 16:00 ET (20:00 GMT).

The most recent decrease in gold happened after data showing a 0.5% decline in the U.S. Producer Price Index in July, reinforcing the notion that inflation is receding from four-decade highs.

The so-called PPI numbers for July followed the more significant Consumer Price Index or CPI for the month of July. The CPI figures indicated a zero increase for July and an annual gain of 8.5%, despite predictions of 0.2% and 8.7%, respectively.

According to Ed Moya, an analyst at the online trading platform OANDA, investors may have overestimated the likelihood of a Fed policy change. Within the next several months, further data will be necessary for gold to demonstrate that inflationary pressures are diminishing.

In recent days, at least three Fed officials have suggested that the central bank is not yet ready to decrease interest rates.

Neel Kashkari, president of the Minneapolis Federal Reserve Bank, stated at the Aspen Ideas Conference that despite "good" CPI figures, the Fed is "far, far from declaring victory" on inflation.

Kashkari claimed that he has not "seen anything that changes" the need to increase the Fed's policy rate to 3.9% by the end of the year and 4.4% by the end of 2023.

The current rate is between 2.25 and 2.5%.

Mary Daly, head of the Federal Reserve Bank of San Francisco, emphasized in an interview with the Financial Times that it is much too early for the U.S. central bank to "declare victory" in its fight against inflation.

According to the story, Daly noted that a half-percentage-point rate rise was her "baseline," but she did not rule out a third consecutive 0.75-percentage-point rate hike at the September meeting of the central bank's policy committee.

Charles Evans, president of the Chicago Fed, stated that he anticipates the Fed will likely need to raise its policy rate to 3.25 percent to 3.5 percent this year and to 3.75 percent to four percent by the end of next year, as Fed Chair Jerome Powell indicated following the Fed's most recent meeting in July.

He observed, however, that the CPI data represented the first "positive" inflation statistic since the Fed began gradually increasing interest rates in March — a quarter-point at first, then half a point, and ultimately three-quarters of a point in both June and July.