US Dollar Surges to 13-Month High as Gold Hits Weekly Losses Ahead of Inflation Data

The US dollar experienced a strong rally on Thursday, approaching its biggest monthly increase in about a year, as gold prices continued their downward trend, recording the largest weekly losses. This movement occurred ahead of the release of major US inflation data.

This week, the dollar surpassed the 1.14 level against the euro, reaching its highest point in 13 months at 1.1325 dollars overnight before settling around 1.1353 dollars during Asian trading.

Against the Japanese yen, the dollar stood at 161.73 yen, close to its highest level in over four decades versus the struggling Japanese currency.

The US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, peaked at 101.8 overnight—its highest in 13 months—and opened the Asian session near 101.6.

Gold Prices Drop Below Key Threshold

The strength of the dollar pushed gold prices below $4,000 per ounce for the first time in over seven months. At one point, Bitcoin prices also briefly fell below $60,000, a level not seen since 2024.

At 00:43 GMT, spot gold declined by 0.4% to $3,985.89 per ounce after hitting its lowest point since November 2025 on Wednesday. Meanwhile, August gold futures in the US fell 0.2% to $4,001.60.

Gold prices slipped below the critical $4,000 level amid dollar gains and expectations that the Federal Reserve will raise interest rates.

According to the CME FedWatch tool, market participants anticipate three US interest rate hikes this year, with roughly a 67% probability of an increase in September.

Investors are awaiting the release of US Personal Consumption Expenditures data, the Federal Reserve's preferred inflation gauge, scheduled for later today to gain further insight into monetary policy direction.

Other Precious Metals' Performance

Silver prices in spot trading fell 0.2% to $57.33 per ounce, and platinum declined 0.2% to $1,575.85. Conversely, palladium rose 0.3% to $1,170.25.

Market commentary noted that gold is trading below $4,050, with a potential dip below $4,000 likely but not advisable to wait for. Silver is under $60. Traders are factoring in possible rate hikes that may not materialize. Even if hikes occur, they may be insufficient and too delayed to curb inflation, which is expected to rise faster than rates—this scenario is bullish for gold.

Federal Reserve Official Comments on Inflation Outlook

Oustan Goolsby, President of the Federal Reserve Bank of Chicago, recently stated that the stability of the US labor market is leading him to focus on the critical question for policymakers: whether the current high inflation will persist for an extended period or gradually decline as the impact of elevated tariffs fades and tensions from the Iranian conflict ease.

Two days prior, Goolsby indicated that the Federal Reserve still faces inflation well above its target, noting that recent price trends have not moved in the desired direction.

He added that his main concern is determining whether the factors driving inflation higher are temporary or will last longer, hindering a return to the 2% inflation target.

Goolsby emphasized that the Federal Reserve has committed to bringing inflation back to this target level, making the assessment of the persistence of price pressures a top priority at present.