Gold prices fell sharply, nearing the $4,300 level, after the European Central Bank announced a 0.25% rate hike, its second this year, and US PPI for August accelerated on higher energy costs tied to the conflict in Iran. The data prompted markets to raise the odds that the Federal Reserve will hike rates by 0.25% at next week's meeting to about 71% from 61% before the PPI release. Global gold prices closed down $88.26, or 2%, at $4,317.02. Prices began falling sharply from around 7:00 p.m. and dropped more than $50 after the ECB announced its rate hike. US Treasury yields rose after the first Treasury Buyback round under the new framework repurchased about $5.2 billion of bonds, below market expectations, and the 10-year bond yield touched its highest level in nearly three years. The SPDR gold fund sold 0.35 tonnes the previous day and now holds 1,050.28 tonnes. For September overall it has bought 7.92 tonnes, while year-to-date since January 1 it has sold a net 21.73 tonnes. Markets are watching Friday's CPI report, the last major economic data point before the Fed's September 15-16 meeting. Gold prices look set to end the week down more than 2%, a third straight weekly decline.
ECB announced a 0.25% rate hike, its second this year, pushing the ECB policy rate/yield higher.
US PPI accelerated and Fed hike odds rose to ~71%, lifting Treasury yields; the 10-year yield touched its highest in nearly three years.
