One of the factors contributing to the surge in gold prices is the release of the U.S. Producer Price Index (PPI) data for August. The data indicated that the PPI slowed more than expected, suggesting that future inflation may tend to decline.

The release of core inflation data from the U.S. remains high, leading investors to reduce their expectations of a 50 basis points (bps) interest rate cut by the Federal Reserve (Fed). However, an article by Nick Timiraos from The Wall Street Journal (WSJ) and comments from former New York Fed President William Dudley suggest that a 50 bps rate cut should be considered. This has resulted in a decrease in U.S. government bond yields, selling pressure on the U.S. dollar (USD), and a surge in gold prices.

Source: Fxstreet