Gold Reaches Record High As Dollar Weakens On Soft Producer Inflation Data; Wall Street Eyes Fourth Day Of Gains

A broadly softer-than-expected U.S. producer inflation report triggered market shifts on Thursday, driving down the value of the dollar and Treasury yields while boosting gold prices to a new all-time high.

Meanwhile, U.S. equity futures ticked upward, signaling a potential fourth consecutive session of gains for U.S. stocks.

Economic data released Thursday showed the headline Producer Price Index (PPI) for final demand slowing to 1.7% year-over-year in August, below market expectations of 1.8% and down from July's downwardly revised 2.1%. On a monthly basis, PPI increased by 0.2%, surpassing the forecasted 0.1% and improving from the revised flat reading for July.

Core PPI, which excludes volatile food and energy prices, remained stable at 2.4% year-over-year, slightly underperforming the expected 2.5%. On a month-to-month basis, core PPI rebounded with a 0.3% rise, up from the previous month's 0.2% decline and surpassing expectations of a 0.2% increase.

In parallel, weekly initial jobless claims came in at 230,000, in line with market forecasts, signaling stable labor market conditions.

Across the Atlantic, the European Central Bank (ECB) cut its key policy rate by 25 basis points, marking the second reduction since June. The ECB justified the move as part of its efforts to moderate monetary policy.

The ECB kept its inflation outlook steady but revised its growth forecasts downward. The central bank emphasized a data-dependent approach for future decisions, with no commitment to further rate cuts.

Market Reactions

Market reactions to the U.S. data were relatively muted. Rate-cut expectations for the Federal Reserve's meeting next week remained stable, with the probability of a 25-basis-point cut holding firm at 85%.

• U.S. Treasury yields softened, with the iShares 20+ Year Treasury Bond ETF TLT down 0.2% as yields slightly decreased.
• The U.S. dollar, as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, slipped 0.1%.
• The S&P 500, as tracked by the SPDR S&P 500 ETF Trust SPY, traded 0.2% higher in the premarket, as of 9:05 a.m. ET.
• Tech stocks, followed by the Invesco QQQ Trust, Series 1 QQQ, were 0.1% higher.
• Small caps, as tracked by the iShares Russell 2000 ETF IWM, rose 0.4%.
• The Energy Select Sector SPDR Fund XLE was the top-performing S&P 500 sector in the premarket, up 0.6%.
• Gold prices, monitored through the SPDR Gold Trust GLD, rose by 1.1% to 2,538 per ounce.
• Bitcoin BTC/USD rose 1.3%.

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