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US Inflation Falls for First Time Since 2020, Gold Surges 2%
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US Inflation Falls for First Time Since 2020, Gold Surges 2%
US consumer prices dropped 0.4% in June, the first monthly decline since April 2020, pushing spot gold up 2.1% and the dollar lower.
- The Consumer Price Index fell 0.4% month-on-month in June, the largest monthly drop since April 2020, the Bureau of Labor Statistics reported, led by a 5.7% decline in energy costs.
- Core CPI, excluding food and energy, was unchanged month-on-month after a 0.2% rise in May; the annual core rate slowed to 2.6% from 2.9%.
- Spot gold rose 2.1% to $4,083.99 per ounce, and the dollar index fell 0.6%, making the metal cheaper for holders of other currencies.
- Federal Reserve Chair Kevin Warsh said the central bank is committed to price stability and does not tolerate persistent high inflation.
What happened since
Gold Retreats and Dollar Weakens as Oil Surge Fuels Inflation Fears
Gold prices fell and the dollar weakened on Wednesday as a surge in oil prices raised inflation concerns, even as US consumer price data came in weaker than expected.
- Gold spot fell 0.7% to $4,025.35 per ounce, and US gold futures for August delivery dropped 0.9% to $4,033.12.
- Oil prices extended gains for a third session after US President Donald Trump reimposed a naval blockade on all Iranian ports and threatened to strike power plants and bridges next week if Iran does not resume negotiations.
- The US dollar index slipped to 100.8 after a 0.35% decline in the previous session, its largest drop in nearly two weeks.
- US consumer price inflation slowed more than expected to 3.5% year-on-year in June, with a 0.4% monthly decline, the first since April 2020.
Latest developments
- Jul 15 — The US dollar has stabilized around 100.9 points after falling in the previous session, traders scaling back bets on a rate hike.
Coverage
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