Investing.com – Gold prices slumped on Friday as inflation data pointed to a steady interest rate increase by the Federal Reserve.
Comex for December delivery fell 1.17% to $1,211.90 a troy ounce as of 11:11 AM ET (16:11 GMT).
The producer price index (PPI) increased 0.6% in October. The higher-than-expected numbers support the Fed’s gradual rate increase policy, which helped boost the greenback. The Fed held interest rates steady on Thursday, as expected, but remained on track to continue gradually tightening.
The central bank hiked U.S. interest rates three times this year and is widely expected to do so again in December.
Interest rate increases dampen appeal for gold, while boosting the dollar.
The , which measures the greenback’s strength against a basket of six major currencies, inched up 0.05% to 96.60.
The precious metal usually falls as the dollar rises, as it is denominated in the U.S. currency and is sensitive to moves in the dollar. Bullion becomes more expensive for holders of other currencies when the dollar rises and cheaper when it falls.
Meanwhile weak economic global growth worried investors as producer prices in China fell for the fourth-straight month, raising more concerns that the world’s second-largest economy is struggling as it battles the U.S. in a trade war.
Chinese President Xi Jinping said on Thursday, ahead of a meeting with his U.S. counterpart Donald Trump, that Beijing wants to resolve problems with the U.S. through talks but Trump must respect China’s choice of development path and interests.
Other metals were lower on the Comex, with falling 2.67% to $14.135 a troy ounce. Among other precious metals, platinum decreased 1.45% to $857.70 while palladium dipped 1.52% to $1,099.10 an ounce. futures slumped 1.50% to $2.696 a pound.
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