Gold prices remained steady above $4,150 an ounce on Thursday, buoyed by a weaker US dollar and softer Treasury yields despite renewed inflation concerns.
Spot and futures prices strengthen
At 9:50 AM EST, spot gold traded near $4,156 per ounce, gaining 1.63% from the previous session. December gold futures were quoted at $4,174 an ounce. Market participants noted a recovery in bullion prices even as new inflation data challenged the outlook for non-yielding assets.
Analysts attributed the rebound partly to a softer dollar and a decline in Treasury yields, which can enhance gold’s appeal as a safe haven when inflationary pressures rise.
Gold often attracts investors during periods of uncertainty, but higher yields usually create competition by making interest-bearing assets more attractive.
US wholesale inflation surges above forecasts
The US Department of Labor reported that the Producer Price Index (PPI) climbed 6.3% year over year in September, exceeding expectations of 5.5%. On a monthly basis, the final demand index advanced 1.3%, posting its largest jump since March 2022. Annually, the increase was the most significant since December 2022.
Core PPI, which strips out food and energy costs, rose 0.7% in September, pushing its annual growth rate to 5.0%. These figures signaled that inflation is widespread across various sectors, posing challenges for business leaders and policymakers.
Persistent inflation could prompt the Federal Reserve to keep interest rates elevated or even pursue further hikes, a move that usually weighs on gold prices due to its non-yielding nature.
TD Securities strategist Ryan McKay noted that support for gold may be found in the $4,000 to $4,100 area, with inflows from exchange-traded funds and central bank purchases helping stabilize the market if selling pressure returns.
| Month/Year | Headline PPI (YoY) | Forecast | Monthly PPI | Core PPI (MoM) | Core PPI (YoY) |
|---|---|---|---|---|---|
| September 2026 | 6.3% | 5.5% | 1.3% | 0.7% | 5.0% |
The resilience of gold above $4,150 per ounce suggests some investors may be hedging against the risk of further inflation shocks.
Focus turns to the Fed as inflation risks persist
The stronger than expected PPI release followed a similar surprise in the Consumer Price Index for September, with consumer inflation driven by higher energy and transport costs. This series of data has heightened speculation surrounding the Federal Reserve’s stance at its next policy meeting.
UBS predicted on Thursday that an interest rate hike could come in December, with additional tightening possible in early 2027. The bank indicated that policy rates are likely to remain elevated for an extended period due to continued inflation.
The relationship between inflation and gold has grown more nuanced in recent months. While higher yields tend to send bullion lower, persistent concerns about economic stability and inflation could encourage renewed demand for gold, especially as a hedge in turbulent markets.
The interplay between Treasury yields, the US dollar, and investor sentiment will remain central in shaping gold’s trajectory as key economic data is released.
The outlook for gold remains uncertain, especially as systematic selling and changing investor positioning influence short-term movements. Nonetheless, Jefferies maintained its long-term price forecast for gold at $5,000 per ounce by 2027.
