Gold falls on renewed dollar strength

Gold prices fell to around $3,330 per ounce on Thursday, relinquishing some of the gains seen in the previous session as the US dollar regained strength following reduced uncertainty over the Federal Reserve chair’s position. Earlier reports had suggested that President Donald Trump was considering removing Fed Chair Jerome Powell, which had initially unsettled markets and bolstered gold’s appeal as a safe-haven asset.

However, Trump later denied these claims, though he continued to voice criticism of the Fed’s interest rate policy, maintaining an undercurrent of tension around monetary policy expectations.

In economic data, June’s flat US Producer Price Index (PPI) reading pointed to steady wholesale inflation, which helped ease concerns that tariffs were driving a sharp increase in input costs for businesses. This contrasted with the June Consumer Price Index (CPI) report, which showed a rise in consumer inflation, underscoring the complex and uneven inflation dynamics facing the economy.

The softer PPI reading suggested that tariffs may be impacting the economy less severely than initially feared, providing some relief to investors worried about sustained inflationary pressures.

On the trade front, developments further weighed on gold’s safe-haven status.

The European Union’s top trade official traveled to Washington on Wednesday for high-stakes tariff negotiations with key US trade and commerce representatives, signaling a willingness to engage constructively and possibly ease trade tensions between the two economic blocs. Additionally, US-China relations showed signs of thawing, with the US lifting its ban on certain AI chip exports to China and announcing a new trade deal with Indonesia. These moves helped alleviate fears of escalating trade conflicts, which in turn reduced demand for gold as a protective asset amid geopolitical uncertainties.

Taken together, these factors combined to dampen gold’s rally, as investors shifted focus back to risk assets and the evolving macroeconomic and geopolitical landscape.